Goldman Sachs has released a list of ten energy stocks it recommends clients buy, arguing that opportunities now lie beyond the refining sector despite elevated oil prices. The bank's team, led by Neil Mehta, suggests shifting focus to specific large-cap and small-cap names as crude hovers near $100 per barrel on paper, while physical prices remain significantly higher due to supply constraints from the ongoing Iran conflict.
The recommendation comes as the war in Iran enters its ninth month, with Iranian oil exports nearly nonexistent and multiple shipping attacks reported in the Gulf region. Goldman analysts note that while refining stocks have seen substantial gains, the sector may be nearing a peak in new portfolio additions. The bank specifically highlights H.F. Sinclair, a refiner that has risen 138% over the last 12 months, as a name potentially losing appeal due to its valuation relative to median Wall Street price targets.
On the large-cap front, Goldman favors ConocoPhillips and Occidental Petroleum. For ConocoPhillips, the firm is monitoring the Willow project in Alaska and the status of a damaged natural gas plant in QatarEnergy, where the company holds an investment. ConocoPhillips recently replaced CEO Ryan Lance with Andrew O'Brien. Occidental Petroleum, which appointed Richard Jackson as CEO, received a Buy rating from Goldman with a $69 price target. The stock was added to Goldman's "America's Conviction List" following a 53% gain over the past year, with analysts citing a new cash flow improvement plan.
Among smaller-cap selections, Goldman points to Permian Resources, which operates in the Delaware Basin in New Mexico. Analysts project free cash flow growth of around 20% over the next couple of years, driven by a shift toward oil-focused production. The firm also recommends TC Energy, a Canadian pipeline company whose stock has recently pulled back. Goldman believes TC Energy will announce more U.S. projects and expresses comfort with its funding outlook, citing CEO François Poirier's comments on infrastructure underinvestment.
The broader market remains volatile, with oil prices capable of moving $10 in either direction based on headlines. Shipping costs and insurance premiums remain high as the U.S. Strategic Petroleum Reserve continues to decline. Investors are also watching upcoming earnings reports from energy services firm SLB on October 23, followed by Baker Hughes and Cheniere Energy, with major focus on ExxonMobil and Chevron on October 30.