Shell (LSE: SHEL) shares have climbed 13% in the past month, with BP (LSE: BP.) up close to 6%. That’s not surprising after Brent crude and West Texas Intermediate — the two big global benchmarks — peaked around $119 per barrel early Monday (9 March). At the time of writing, they’ve both fallen back a bit, but we’re still looking at about $103 per barrel.
G7 finance ministers are set for an emergency meeting to discuss the possible release of International Energy Agency oil reserves, the Financial Times reports. But with the Strait of Hormuz effectively closed, and an estimated 1,000 or so oil tankers queueing up, would that really solve the problem?
Maybe it really is time to stock up on BP and Shell shares. Let’s take a closer look.
Short term, or…
Part of me instinctively thinks this is all a short-term thing. Politicians are talking of the Iran conflict measured in weeks, not months. And when it’s over, oil prices will settle down once again, right?
They did just that following the ending of the so-called 12-Day War in 2025. And the chances of the same happening again this time must be good. But this one is a deeper and wider conflict. And some sector analysts are beginning to suggest Middle-East oil production might face longer-term setbacks.
As oil backs up, some states are slowing production — and even shutting some wells. If the tankers aren’t getting in and out to carry the black stuff away, what else can they do? Short-term storage facilities are limited.
And we perhaps shouldn’t assume the pumping can resume with just the turn of a tap. Oil well pressure can be lost, and it could take some time to get back to the usual flow rates. Investors should definitely consider these longer-term factors.
So what should we do?
Still, I’d never invest in oil based on a short-term shock like this. I know sector-specific crises happen. They always have done, and I’m sure they always will. But I have absolutely no clue about when they’ll start, or when they’ll stop. So attempting to time oil prices is completely off the table for me.
But you know what? Times like this remind me that we’ll one day move beyond carbon-based energy. And I’m more likely to consider buying something like Greencoat UK Wind. It’s a real estate investment trust (REIT), and it owns wind farms across the UK. Nobody can close any wind bottlenecks. In fact, Greencoat is on my Stocks and Shares ISA shortlist.
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Cash cows
But never mind the wind, what about the oil?
Whatever happens in the coming days and weeks, Shell and BP still look like decent long-term cash cows to me. Shell shares currently offer a forecast 3.5% dividend yield. It’s not the biggest on the FTSE 100, but long-term reliability can be more important. And BP offers a bigger 4.9%.
And that’s why I think investors should consider Shell and BP, because of the long-term cash prospects. Not because of short-term oil prices.
