The volatility of crude oil prices in the past 30 days has been extreme. The expectation that we would see low crude prices like the prices we saw last year are not expected in 2026.

The sector with the most negative impact from this is consumer discretionary. Stocks like LULU, NKE, ABNB and AAPL will see a slow down in sales as the consumer’s wallet gets smaller due to increase gasoline prices. These same companies will also deal with increase input cost since shipping and transportation will increase. This will shrink profit margins and free cash flows. The valuations of consumer discretionary stocks have gone down and there will be more sellers than buyers of these stocks.

Sectors that will also see some negative impact from high oil prices are financials and industrials. Companies in these sectors will experience a slower revenue growth. Stocks like CAT, UAL and JPM will see profits go down or remain stagnate. Travel, infrastructure projects and financing should experience a slower economic activity.

The sectors that stand to benefit most is energy and consumer staples. Energy companies will see an immediate increase in revenue, profits and free cash flow. Stocks like XOM, ENB and OKE will pay healthy dividends and will be a place for investors that seek outperforming stock this year. The high volatility and increased geopolitical risk has driven investors into safe consumer staple stocks. Safe stocks like KR, PG and PM will pay dividends and protect capital during this higher risk period.

Are higher oil prices here to stay? That is hard to predict the exact timing. We can make one conclusion which is that oil prices will be generally be higher in the next 2 years, then they have been for the past 2 years.