Crude Oil Trade: Defensive And Tactical Stock Buying
Steven Cress, Quant Team
Summary
- Crude oil stocks stand to gain from surging prices and supply chain disruptions, offering investors defensive, short-term tactical buying opportunities.
- The goal of defensive trading is to preserve capital and mitigate risk until more favorable market conditions return.
- Explore the ‘Strong Buy’ recommendations in this article, which are up an average +60% YTD, trade at a discount, and offer strong fundamentals that may benefit from the crude oil trade.
- While not “defensive” in a traditional sense, each stock offers robust growth, high demand, and tailwinds amid global trade tensions and rising prices – characteristics that could fuel them in the short term.
-I am Steven Cress, Head of Quantitative Strategies at Seeking Alpha. I manage the quant ratings and factor grades on stocks and ETFs in Seeking Alpha Premium.
I also lead Alpha Picks, which selects the two most attractive stocks to buy each month, and also determines when to sell them.
March Madness: Crude Oil Briefly Topped $119/barrel
Extreme fear is moving global markets.
As of Wednesday’s market close, major indices were down over 3% YTD, with the Federal Reserve contributing to the slide after holding interest rates steady.
In Thursday trading, global tensions escalated after an Iranian strike on Qatar inflicted “extensive damage” on QatarEnergy’s Ras Laffan liquefied natural gas facility, which produces nearly 17% of its LNG export capacity.
The news extended the previous day’s sell-off of U.S. stocks and bonds.
Meanwhile, Crude Oil’s rally (CO1:COM) and (CL1:COM) once again soared above $100 per barrel this week, with Brent Crude briefly topping $119.
The Strait of Hormuz accounts for approximately 25% of global seaborne oil supplies and nearly ⅓ of the world’s global fertilizers – necessities in a modern world.
Will inflation go up?
Low energy prices have been vital in keeping inflation in check, and year-over-year price spikes could push CPI above 3% if crude oil continues to extend its surge.
In a recent interview, Francisco Blanch, head of Commodities and Derivatives Research at Bank of America Global Research, advised that not opening the Strait of Hormuz will likely drive oil prices above $200 per barrel, with supply disruptions leading to a potential global recession.
He further stated that soaring commodity prices are forcing demand destruction, and “Demand destruction is essentially another term for economic activity contraction or recession.”
The fear of rising inflation is weighing on investor sentiment.
After the Federal Reserve held rates at 3.5%--3.75%, Bleakpoint BFG Wealth Partners’ Chief Investment Officer, Peter Boockvar, said, “oil is the new Fed chair.”
The government’s debt levels, rising geopolitical risks, lingering inflation, a tight labor market, and surging energy prices could reignite inflation.
The material impacts of the war in Iran have already prompted European Central Bank (ECB) officials to consider an April interest rate hike, based on inflation of 2.6% in 2026, above the 2% target.
ECB's Inflation and Growth Forecasts (Bloomberg)Fearful investors around the world are looking to play defense, especially as war in the Middle East sends energy shocks.
Should the war in Iran persist beyond March, the impacts and implications will likely last longer, and oil may be a defensive opportunity.
While not “defensive” in a traditional sense of non-cyclical and low beta, energy is a modern-day staple – a necessity.
The Energy Sector (XLE) has been the top-performing year-to-date, and a close second over the past year behind Technology (XLK).
Energy Tops YTD Sector Performance (Seeking Alpha Market Data (as of 3/18/26))Risks increase the longer the Iran war persists, and as Blanch emphasizes, the greater the supply gap relative to global GDP.
Should the oil rally extend, a new floor for oil prices may be created as some energy companies become more profitable.
We’re experiencing a historic rise in prices, disrupted production and shipping routes in the Middle East, and tightening global energy supplies.
Even with a near-term resolution that includes the full reopening of the Strait of Hormuz, it will take time.
And, reopening the waterway and restoring commercial transport will require:
- Repairs to damaged refineries
- Mines cleared
- Supply chains restored
- Production back online
These are just a few of the first steps for resolution, which should bring prices back down.
So even in the near term, the crude oil trade offers the potential defensive, short-term tactical buy.
Each of the stocks selected by the Quant Ratings offers robust growth, high demand, and tailwinds amid global trade tensions and rising prices, which could fuel them in the short term.
Top Energy: How to find crude oil stocks as investors rotate
Investors are looking to hedge against geopolitical uncertainty while benefiting from the oil and energy stocks rally.
Using Seeking Alpha’s Stock Screener, I selected Strong Buys in the energy sector that have risen in line with the latest price surge, narrowing it down to those specifically with crude oil operations.
The energy sector tends to be cyclical, so investors should assess their risk tolerance, as prices can swing dramatically in either direction.
Petrobras: Cash Cow Racking Up Record Oil Exports
Petróleo Brasileiro S.A. (PBR) is leveraging its geographic advantage away from the Strait of Hormuz to capitalize on its refined product scarcity and continue to expand on record Q4 2025 exports of 1.2M bbl/day, +79% y/y.
1. Petróleo Brasileiro S.A. - Petrobras (PBR)
Market Capitalization: $122.11B
Quant Rating: Strong Buy
Sector: Energy
Industry: Integrated Oil and Gas
Quant Sector Ranking (as of 3/19/2026): 2 out of 225
Quant Industry Ranking (as of 3/19/2026): 1 out of 16
Petrobras’ Q4 2025 financial results were marked by a 14% year-over-year decline, driven by Brent crude prices of $69/barrel. But look at where crude oil prices are today.
Brazil’s largest energy producer is seeing a turnaround, as crude oil soared above $113/barrel this week.
Strategically, the PBR team increased total oil production by 11% to mitigate its 14% decline.
The company has maintained tremendous growth and profitability, as highlighted by its Quant Ratings and Factor Grades below.
PBR Stock Quant Ratings & Factor Grades (Seeking Alpha )Escalating tensions in the Middle East are resulting in aggressive moves by the top Integrated Oil and Gas provider.
Supported by an EPS long-term growth rate (3-5Y CAGR) of nearly 34% vs. the sector’s nearly 9%, the company’s unprecedented 2025 production allowed it to exceed targets, achieve efficiency in each of its commercial oil and gas units, and support its $36.57B cash hoard and future production.
Unlike its competitors, specifically Gulf producers, PBR’s ability to produce completely outside of the Middle East risk zones has fueled its already bullish momentum, potentially allowing the energy giant to capture higher arbitrage pricing.
Despite its quarterly outperformance of the sector’s momentum, PBR continues to trade at an attractive valuation, highlighted by a forward PEG that represents more than an 85% discount to the sector.
In addition to offering diesel, gasoline, and jet fuel, PBR’s refining utilization reached 91% and is likely to increase in meeting diesel shortages and demand. In a press release, CFO Fernando Melgarejo said,
“2025 results confirm the consistency of our strategy, based on capital discipline, production growth and operational efficiency.
Even in a backdrop of a sharp decline in Brent prices, we generated $36 billion in operating cash for the year.
We continue to deliver a robust cash flow, supported by quality projects that increase production, with high returns and quick cash generation.”
If a state-run oil giant with tremendous fundamentals can profit amid low energy prices, imagine its bullish potential – even if for the short-term – with crude oil trading over $113/barrel.
But let’s not forget the historic peaks that tanker spot rates reached in March, as vessel constraints for shipping crude oil put owner/operators like Frontline plc (FRO) in high demand.
2. Frontline plc (FRO)
Market Capitalization: $7.16B
Quant Rating: Strong Buy
Sector: Energy
Industry: Oil and Gas Storage and Transportation
Quant Sector Ranking (as of 3/19/2026): 14 out of 225
Quant Industry Ranking (as of 3/19/2026): 4 out of 54
After very large crude carriers ((VLCC) surged to six-year highs of more than $170,000/day in February, on Monday, March 2, VLCC tonnage from the Middle East to China rates soared above $420,000/day – historic – as LNG tanker day rates topped $200,000/day.
Is it time to capitalize?
The PRO Quant Portfolio, a weekly rebalanced selection of 30 Top Quant Strong Buy stocks spanning multiple regions and market caps, added stock Frontline plc (FRO) on February 23, 2026.
FRO Stock Quant Ratings & Factor Grades (Seeking Alpha)FRO, a Cyprus-based shipping company that specializes in the ownership and operation of oil and product tankers, has benefited and continues to capitalize on record-high tanker rates.
Similar to PBR, urgent demand for oil transport and vessel availability has allowed FRO to maximize exposure to the spot rates and rallying crude oil prices.
With at least 20 LNG carriers halted in the Persian Gulf, FRO’s eco-friendly fleet with an average age of approximately 7 years could capitalize.
Previously benefiting from the crisis in Venezuela, FRO is now capitalizing on oil being rerouted from the Strait of Hormuz; longer voyages equate to higher earnings, with daily rates flowing directly into FRO’s EBITDA and cash.
“Periods of volatility tend to create opportunities, and Frontline has moved decisively, both in renewing its VLCC fleet and in securing attractive fixed revenue, as we enter what may prove to be an unprecedented period for the tanker industry,” CEO Lars Barstad said in the earnings statement.
The tanker industry is highly cyclical, and FRO has faced headwinds in meeting earnings estimates.
However, its Q4 revenue increased 46% to $624.5M on strong spot time charter equivalent (TCE) rates, with VLCCs earning $74,200 per day, Suezmax tankers $53,800, and LR2/Aframax $33,500.
FRO’s tremendous Profitability Grade is highlighted by strong EBITDA, operating profit, and cash flow margins.
In addition to a 'B' Growth Grade backed by positive earnings revisions from Wall Street analysts, Frontline’s EPS is expected to increase by 104% in FY 2026 while revenue is projected to climb by 54%.
Meanwhile, the stock continues to trade at a discount, as highlighted by its forward P/E Non-GAAP ratio, which is 43% below the sector.
Investor Takeaway
While the geopolitical backdrop for PBR and FRO poses risks, analysts estimate that high oil prices are likely to persist – at least in the near term.
Companies able to capitalize on surging demand; those that possess strong profitability and fundamentals offer investors a defensive, tactical buying opportunity.
While both stocks tend to be in cyclical industries with commodity price exposure in their cash flows, the current environment is ripe for risk-on tactical plays, in 2026’s top-performing sector, energy.
We have many stocks with strong buy recommendations, and you can filter them using Stock Screens to suit your specific investment objectives.
But, Alpha Picks might be ideal if you're interested in two monthly stock picks of the top 'strong buy' quant stocks.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
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