KEY TAKEAWAYS
- Brent crude surged 13% in one session, immediately lifting projected revenue for upstream oil producers.
- Small-cap producers can move sharply because oil price gains flow directly into cash receipts.
- Defense contractors rallied 4% to 7% as governments moved to replenish weapons systems.
- LNG exporters benefited from wider spreads and rerouted global energy demand flows.
Crude oil has spiked 13%, defense orders are accelerating, and select producers and contractors are gaining strong revenue and cash flow leverage.
Oil and gas markets swung sharply in early March 2026 as strikes and reprisals around the Gulf forced buyers to reprice supply risk.
Brent climbed into the low $80s per barrel after a string of disruptions. On February 28, the U.S. and Israel initiated a series of strategic strikes against Iranian leadership and nuclear facilities, sparking fears of a prolonged regional conflict.
As the UN monitors the situation for humanitarian impacts, the markets have already issued their verdict: volatility is back.
Meanwhile, market commentary points to wider product spreads, higher tanker insurance, and logistics bottlenecks that can compress available seaborne supply.
These new developments change cash flow math for upstream producers, create windfalls for trading desks, and speed government buying for missile, sensor, and sustainment inventories.
“If history serves as a guide, further destabilization of Iran could lead to significantly higher oil prices sustained over extended periods,” noted Natasha Kaneva, Head of Global Commodities Strategy at J.P. Morgan
This statement highlights that past regime changes in oil-producing nations have historically triggered price spikes averaging 76%.
The result is small producers show magnified gains when benchmarks jump, LNG and trading desks post faster revenue upgrades, and defense primes see clearer backlog growth.
Below we look at some of our picks for the best stocks to buy as the conflict between Iran and the U.S. escalates.
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1. Indonesia Energy Corp Ltd (INDO)
Indonesia Energy Corp Ltd is a small-cap upstream producer focusing on high-growth assets in the Kruh and Citarum blocks.
As a small cap stock this is a high risk high reward stock to consider as price swings can be brutal.
With a market capitalization of approximately $88 million, the company acts as a high-beta play on crude price volatility. As Brent crude surges, INDO’s realized selling prices—tied directly to global benchmarks—see almost instantaneous appreciation.
During the early March 2026 escalation, INDO shares surged over 40% in a single session, reflecting its status as a “pure-play” beneficiary of supply-shock fears.
Because its overhead is relatively fixed compared to its revenue potential during a spike, incremental gains in oil prices flow directly to the bottom line.
However, the company remains a speculative vehicle; while it offers massive upside in a war-driven market, it carries the operational risks inherent to small-cap energy explorers.
What To Watch
- Production consistency
- Reserve updates
- Funding plans for drilling programs
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2. Chevron Corporation (CVX)
Chevron stands as a titan of integrated energy, positioned to capture value across the entire oil and gas value chain. In the wake of the March 2026 Gulf disruptions, Chevron has emerged as a preferred “safe haven” for energy investors.
The company is currently entering a “free cash flow gusher” phase, bolstered by its recent acquisition of Hess and the ramp-up of the Stabroek block in Guyana, which is expected to add billions to its 2026 cash flow.
While smaller firms offer volatility, Chevron offers scale. Its global trading desks are expertly positioned to arbitrage regional price spreads caused by the closure of the Strait of Hormuz.
Analysts at Simply Wall St currently project Chevron’s revenue to approach $196 billion by 2028, and a sustained $80+ Brent price could pull those forecasts forward. Its disciplined capital allocation and robust dividend make it a defensive anchor in a wartime portfolio.
What To Watch
- Weekly U.S. inventory data
- Production guidance
- Commentary on refining margins
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3. BAE Systems plc (BA.L)
As the leading European defense prime, BAE Systems is a direct beneficiary of the “multi-decade European rearmament programme” and the immediate need for weapons replenishment in the Middle East.
On February 18, 2026, the company reported a record order backlog of £83.6 billion and guided for sales growth of up to 9% this year. The current US-Iran escalation has only accelerated this timeline.
Morningstar analysts note that BAE’s “sovereign capability status” makes it indispensable as governments move to replenish missile inventories and electronic warfare platforms.
From the Type 26 frigates to the Global Combat Air Programme (GCAP), BAE’s portfolio is perfectly aligned with modern attrition-based warfare needs.
As UK Prime Minister Keir Starmer pushes to accelerate defense spending to 3% of GDP, BAE remains a cornerstone for investors looking to capitalize on heightened geopolitical friction.
What To Watch
- New contract announcements
- Export approvals
- Quarterly backlog updates
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4. Santos Limited (STO.AX)
Santos Limited is a critical player in the Asia-Pacific LNG market, providing a vital bridge as global energy flows are rerouted away from the Middle East.
With an $18.7 billion takeover bid led by ADNOC currently highlighting its underlying value, Santos is more than just a commodity play; it is a strategic asset. In early March 2026, the company’s shares gained 5% as buyers sought non-Gulf sources of liquefied natural gas.
The company’s dual exposure to long-term contracts and spot market prices allows it to capture immediate windfalls when regional tensions spike.
With a dividend yield hovering around 4.6% and a focus on carbon capture and storage technologies, Santos offers a balanced approach to energy investing.
For investors, the focus remains on the company’s ability to maintain high utilization rates at its GLNG and PNG projects amid shifting global demand.
What To Watch
- LNG cargo shipments
- Utilization rates
- Capital expenditure plans
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Conclusion
The escalation between the United States and Iran has sent crude prices sharply higher and forced immediate upgrades to upstream cash flow forecasts.
At the same time, expectations for faster weapons procurement have significantly strengthened defense contractor backlogs.
Indonesia Energy provides pure, volatile exposure to higher oil prices. Chevron offers global scale and diversified cash flows.
BAE Systems stands to benefit from a structural shift in global defense spending, while Santos gains from the tightening of the LNG market. Each operates in a different lane, yet all have clear pathways to potentially turn geopolitical strain into tangible earnings growth.
