Guide to Investing in U.S. Oil Industries
Industry Overview
The United States is one of the world's largest crude oil producers, home to globally-operating companies active across various stages of the value chain. Global oil demand remains high, though it faces pressures from the energy transition. Crude oil prices are highly volatile, dependent on supply factors (OPEC+ country production, U.S. production levels, extraction technology) and demand factors (economic growth, gasoline and diesel consumption). Additionally, geopolitics and environmental policies influence these companies' profitability. Any investment in the sector requires risk tolerance and long-term investment horizons.
Ways to Invest in Oil
According to the financial community Rankia, updated in January 2026, there are five general ways to gain exposure to crude oil. Below is a summary of the options and their characteristics:
1. Financial Derivatives (Futures and Options)
Futures contracts obligate the buyer or seller to purchase or sell a specified quantity of oil at a specific price on a future date. They allow exposure to crude oil without physically purchasing barrels, though they require advanced knowledge and constant monitoring. Options are contracts that grant the right (but not the obligation) to buy or sell oil under these conditions. Most contracts are used for hedging purposes; few result in physical delivery. These instruments can amplify losses and are suitable only for experienced investors.
2. Oil ETFs
These exchange-traded funds replicate indices based on futures or shares of oil companies. Since they rarely hold actual barrels of crude oil, the performance of futures-based ETFs is affected by contract expiration; contango (when futures prices are higher than spot prices) generates a rollover cost that can erode the fund's value. There are oil futures ETFs, oil stock ETFs, and commodity ETFs. Stock-based ETFs offer diversification by investing in multiple sector companies.
3. Investment Funds
These funds do not invest in barrels but rather in companies linked to the production chain. They can be equity funds (oil company stocks), fixed-income funds (oil company bonds), or mixed funds. They are typically actively managed, resulting in higher fees than ETFs and exposure to the risk of poor asset selection by the manager. Examples of North American energy-exposed funds include the Goldman Sachs North America Energy & Energy Infrastructure Equity Portfolio, the BlackRock Global Funds – World Energy Fund, and the Schroder ISF Global Energy.
4. Oil Company Stocks
Purchasing shares of oil companies is a straightforward way to invest in the sector. These stocks typically have high correlation with crude oil prices; their volatility can be greater than the variation in oil prices themselves. Company-specific risk is significant: each company may face operational problems, debt issues, or regulatory challenges. Within this category, there are subsectors with different sensitivities to crude oil prices:
ExxonMobil
ExxonMobil is one of the world's largest oil companies, operating in exploration, production, and refining. After recovering from the 2020 collapse, its shares reached an all-time high of $121 USD in September 2023. The company has increased its dividend for 39 consecutive years, and in February 2024, its dividend yield was approximately 3.68%.
Chevron
Chevron is another major integrated oil company that maintains its position in the Dow Jones index and has diversified toward renewable fuels. In 2024, it offered a dividend yield of over 4.33%. These figures are historical; future yields may vary.
5. Physical Barrel Purchase and Storage
This involves acquiring physical crude oil and storing it. It requires substantial capital, specific expertise, and solving logistics and security challenges for storage; therefore, it is typically not practical for retail investors.
Key Risks and Considerations
⚠️ Important Risks
- Price Volatility. Oil prices depend on global supply and demand, OPEC+ decisions, geopolitical tensions, sanctions, and the global economy. These variables can cause significant price swings and affect sector stocks and ETFs.
- Economic Cycles and Energy Transition Trends. Fossil fuel demand may decline as renewable energy increases and decarbonization policies are implemented. Many integrated oil companies are investing in hydrogen, biofuels, and renewable energy to diversify.
- Company-Specific Risk. Each company has its own risks: high debt levels, operational problems, environmental litigation, etc. Diversifying investments across multiple companies or through ETFs can reduce some of this risk.
- Contango Risk in Futures ETFs. When longer-dated futures contracts are more expensive than spot prices, ETFs must roll contracts by purchasing more expensive futures and selling expiring ones, which erodes returns.
- Fees. Investment funds specializing in energy typically have higher management fees. Comparing fees is important.
General Steps for Investing in the U.S. Oil Industry
- Assess Your Risk Profile and Time Horizon. The energy sector can offer high dividends, but volatility can exceed market averages. Ensure your time horizon and risk tolerance align with the cyclical nature of this industry.
- Choose an Authorized Broker. To invest in U.S. stocks or ETFs from Brazil or other countries, you need an account with a broker that has access to U.S. exchanges (e.g., international brokers or local platforms with partnerships). Verify that it is regulated and offers competitive commissions.
- Decide on an Investment Vehicle. Based on your knowledge and risk tolerance, choose among:
- Individual Stocks if you want to bet on specific companies (e.g., ExxonMobil, Chevron, ConocoPhillips, Schlumberger, Valero Energy). Research their revenue history, debt levels, energy transition investments, and dividend policies.
- Sector ETFs if you prefer automatic diversification. Examine whether the ETF invests in futures or stocks and review fees and potential contango impact.
- Investment Funds, managed by professionals who select energy companies; these can be an option for those seeking active management, though with higher fees.
- Futures or Options, reserved for advanced investors; they allow leverage but can generate significant losses.
- Diversify. Do not place all your capital in a single subsector; combine exploration and production companies, services, refiners, and integrated companies to balance volatility. Also consider assets from other sectors so your portfolio doesn't depend exclusively on oil.
- Monitor Market Developments. Stay informed about OPEC+ news, inventory data, geopolitical conflicts, and climate policies, as they influence crude oil prices. Periodically review your investments and adjust your strategy according to your objectives.
- Consult a Professional. This guide is for informational purposes and does not constitute personalized financial advice. Before making any investment, consult a registered financial advisor to evaluate your particular situation.
Conclusion
Investing in U.S. oil industries can offer attractive dividends and exposure to an essential sector of the economy, but it also involves significant volatility. There are various ways to invest: derivatives, ETFs, investment funds, and oil company stocks, each with different risks and costs. Shares of integrated giants like Exxon Mobil and Chevron provide diversification and consistent dividends, while exploration and production companies or oilfield services can offer greater leverage to crude oil price increases. Regardless of the vehicle chosen, thorough research and a realistic assessment of your risk tolerance are essential.