Three oil stocks to watch in May amid Iran risk

ExxonMobil, Diamondback Energy and Occidental Petroleum reported first-quarter 2026 results this week and are being watched in May as oil prices trade roughly $40 above JP Morgan’s estimate of where 2026 fundamentals should settle. Traders have priced a temporary geopolitical premium into oil amid U.S.-Iran tensions and a U.S. naval escort effort through the Strait of Hormuz known as Project Freedom.

ExxonMobil reported Q1 EPS of $1.16, about 15% above estimates, while free cash flow fell to $2.7 billion from $5.6 billion in Q4 2025. The stock corrected from a high of $176.48 to a low of $141.96 when tensions eased and then bounced as tensions renewed and Project Freedom began. Exxon is trading inside an ascending channel that began April 17 and has seen declining volume as price rose. A daily close above $155.67 would strengthen the upside case; a break below $147.52 would open targets at $142.48, $138.41 and $134.34.

Diamondback reported Q1 EPS of $4.23, about 13% above estimates, and raised 2026 oil production guidance to more than 520,000 barrels of oil per day. The company also increased full-year cash capital spending from $3.75 billion to $3.90 billion. Diamondback’s chart shows two stacked flag-and-pole patterns. The stock closed near $206.18 on May 6. A move above $214.58 would project further gains toward $222.17 and $236.29. A breakdown below the $203–$204 area would open pulls to $192.43 and $187.20.

Occidental posted Q1 EPS of $1.06, beating estimates, but generated negative free cash flow of about $112 million while realized crude averaged $69.91 per barrel. JP Morgan outlines a scenario in which prices remain elevated through the first half of 2026 and then ease toward about $60 per barrel in the second half. Occidental’s chart has a head-and-shoulders pattern with a head near $67.48, a right shoulder near $60.79 and a neckline around $51.20. The stock traded around $59.34; a daily close above $60.79 would project toward $67.48 while a confirmed break below $51.20 would project toward $40.13. An intermediate level of $57.13 would indicate near-term weakness if breached.

Market participants cite May as a window when technical patterns and the timeline for an adjustment to the geopolitical premium overlap. Project Freedom has supported prices by escorting commercial tankers through the Strait of Hormuz. Investors will monitor price action, trading volumes, company guidance and cash-flow trends to assess whether the current premium persists or narrows later in 2026.