Energy stocks have enjoyed a strong rally this year, driven primarily by supply disruptions in the Middle East and the Russia-Ukraine war. The blockage on the Strait of Hormuz has choked around a third of the global crude oil and LNG supplies, pushing prices and margins to multi-year highs.
As a result, the overall energy sector has surged by 40.68% since the beginning of 2026, significantly outperforming the 10.70% gains delivered by the wider market.
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According to an estimate by The New York Times, the 51 large US oil and gas companies have earned more than $130 billion in profits during the six months from April through September this year, compared to less than $47 billion in the same period last year. Refiners also reaped exceptional profits after the 3-2-1 crack spread, which measures US refinery margins, gained more than 150% during the July-September period, from a year earlier.
That said, while the high prices are a major tailwind for oil and gas companies, they have been a headache for American households, prompting them to vote against President Trump’s Republican Party in the recent midterm elections. Democrats campaigned hard on lowering prices, especially at the gas pump, and voters listened. As a result, Brent crude prices have fallen by almost 17% since the end of October, as investors bet that the power shift could hasten the end of the US-Israeli war with Iran.
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The President himself also acknowledged that the war had played a role in his party’s sweeping defeat, while also stating that he had no immediate plans to strike Iran. Experts now believe that after losing Congress to Democrats, a weakened Trump has greater incentive to seek a deal, and a full-scale assault on Iran now looks less likely.
This could spell bad news for American energy stocks, many of which have soared to record highs this year. At the end of the day, the oil business is cyclical in nature, and the latest political developments are a sign that the ongoing cycle may have seen its peak. While it could still take a while for the Iran war to reach a conclusion, investors need to be mindful that even a modest decline in profits could trigger a significant valuation correction for several major energy operators.
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Methodology:
To collect data for this article, we used our screeners to identify American energy stocks with a short % of float of at least 6% as of October 30, 2026. To keep our list relevant, we only picked companies with a market cap of more than $5 billion. Decades of academic and quantitative market research show that stocks with high short interest are statistically more likely to underperform the broader market over time. In major empirical studies, portfolios of heavily shorted stocks have historically lagged low-short-interest stocks by roughly 1% to 2% per month on a risk-adjusted basis. However, high short interest does not guarantee a decline, as extreme short positioning also creates the mechanical conditions for violent short squeezes.
10. Viper Energy, Inc. (NASDAQ:VNOM)
Short % of Float: 6.21%
Market Cap: $14.97 Billion
Viper Energy, Inc. (NASDAQ:VNOM) is a pure-play Permian Basin minerals and royalty company, meaning it collects payments from oil production without bearing the costs of drilling and completion associated with those properties. The company is exposed to development activity across a large acreage position, particularly through Diamondback Energy and other major Permian operators.
Viper Energy reported its Q3 2026 results on November 2, beating estimates in both earnings and revenue. Notably, the company reported daily production of 69,000 barrels per day of oil and 141,152 barrels of oil equivalent, up more than 6% sequentially, driven by recent acquisitions and the continued development from both Diamondback and its third-party operators.
As a result, Viper raised its full-year 2026 oil production guidance with a new midpoint of 67,500 barrels of oil per day, compared to a midpoint of 65,500 barrels previously. The combination of production growth and relatively low operating requirements is a compelling part of the company’s investment thesis.
Viper’s ability to generate substantial free cash flow without funding extensive drilling programs allows it to maintain an attractive dividend yield, currently at 5.61%. This puts it in our list of the 10 Energy Stocks with Highest Dividends.
That said, Viper Energy is heavily dependent on Diamondback Energy, and any operational delays by this primary operator would directly reduce royalty revenues. Additionally, the company is highly exposed to energy price swings because it does not hedge its production heavily, making it particularly vulnerable in the current volatile global energy landscape.
9. APA Corporation (NASDAQ:APA)
Short % of Float: 6.95%
Market Cap: $16.13 Billion
APA Corporation (NASDAQ:APA) is an independent exploration and production company that develops and produces crude oil, natural gas, and natural gas liquids.
APA beat top- and bottom-line estimates in its Q3 2026 results on November 4. Revenue surged by 39.35% YoY, while net income attributable to shareholders jumped by over 240. However, much of this improvement came from higher prices rather than increased production.
APA generated $699 million of free cash flow during the third quarter and returned $537 million to shareholders. Notably, the company capitalized on the higher prices to bolster its balance sheet and retired approximately $450 million of debt, ending the quarter with a total debt of $3.3 billion. The energy firm has reduced total debt by $2.8 billion since year-end 2024, lowering annualized interest expense by more than $180 million.
APA also remains focused on operational efficiency and reiterated its target of achieving $500 million in annualized savings by the end of this year.
That said, the company’s production trends deserve attention. APA’s worldwide oil production decreased 13,400 barrels per day (bpd) to 220,900 bpd during the third quarter from the year-ago period, primarily due to the natural production decline in the North Sea and lower production-sharing contract volumes in Egypt. If oil prices normalize, the company could face pressure from both lower realized prices and declining production volumes.
Clough Capital Partners L.P., an investment management company, stated the following regarding APA Corporation in its Q3 2026 investor letter:
“Energy holdings produced mixed results, with APA Corporation among the detractors. This variation reinforces our preference for evaluating individual business models rather than relying exclusively on a sector outlook. Commodity exposure, contractual revenue, investment requirements, and competitive positioning can produce markedly different outcomes within the same industry. Those differences offer room for active selection even when the broader direction of a market remains uncertain.”
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8. Range Resources Corporation (NYSE:RRC)
Short % of Float: 7.18%
Market Cap: $12.04 Billion
Range Resources Corporation (NYSE:RRC) is a leading US independent natural gas and NGL producer with operations focused in the Appalachian Basin. Natural gas has lately been in the spotlight in the United States, since the country’s consumption of the fuel is expected to hit record highs, driven by LNG exports and power demand from AI data centers.
The company made headlines in October when it was announced that EQT would acquire Range Resources in a $13 billion all-stock deal, creating the largest natural gas producer in the United States. The transaction is expected to close in the first quarter of 2027, but must still be approved by shareholders of both companies and pass regulatory approval.
Range Resources’ established footprint in the Marcellus Shale, one of the most productive natural gas formations in the US, is particularly attractive. The company is known for its liquids-rich natural gas assets, which include valuable NGLs, as well as smaller amounts of condensate. This drives down its breakeven, especially in the current environment when oil prices are high, as NGLs and condensate tend to track the price of oil.
However, oil prices are cyclical, and the current exceptionally high prices are expected to normalize if a breakthrough is achieved in the US-Iran war. This could put a serious dent in Range Resources’ earnings, especially since its liquids production reached a record level of 133,173 bpd in Q3 2026.
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7. Texas Pacific Land Corporation (NYSE:TPL)
Short % of Float: 7.22%
Market Cap: $19.64 Billion
Texas Pacific Land Corporation (NYSE:TPL) is one of the largest landowners in the State of Texas with approximately 900000 acres of land in West Texas. The company monetizes these assets through oil and gas royalties, water sales, produced water royalties, pipeline easements, surface leases, etc. This means that TPL can capitalize on increased drilling and infrastructure development without the capital intensity of traditional E&P firms. This results in extraordinary profitability and free cash flow conversion that consistently ranks among the highest in the sector.
TPL’s underappreciated water services segment further bolsters its economics. The business supports fracking operations and is becoming increasingly important amid the high drilling activity in the Permian Basin.
TPL’s outlook has also received a boost from the ongoing AI boom, including partnerships linked to data center development in West Texas. The company’s land, energy access, and critical water resources position it as a potential beneficiary of the hyperscaler expansion and AI infrastructure buildout.
However, despite its attractive royalty business model, Texas Pacific Land Corp is not immune to the energy cycle. The company acknowledges that its revenue is directly impacted by commodity prices and the development and operating decisions of its customers. The landowner also remains completely unhedged. Additionally, a potential slowdown in data center buildout could also hurt the company’s outlook.
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6. DT Midstream, Inc. (NYSE:DTM)
Short % of Float: 7.66%
Market Cap: $12.21 Billion
DT Midstream, Inc. (NYSE:DTM) is a pure-play natural gas infrastructure company that owns, operates, and develops systems to move, store, and process natural gas. This means that customers can access multiple services through a single infrastructure provider rather than arranging separate transportation and gathering agreements with several companies. Another attractive aspect of DTM is that it largely operates a toll booth business model, which protects it from the cyclicality of natural gas prices.
DTM’s investment thesis increasingly revolves around the rising natural gas demand from LNG export and electricity generation, including data centers. In its Q3 2026 earnings call, the company’s management cited third-party forecasts indicating that the US natural gas demand could rise by more than 25 Bcf per day through 2030.
The midstream operator’s financial performance has also been encouraging. Its nine-month adjusted EBITDA increased from $845 million in 2025 to $914 million in 2026, representing a growth of 8.2%. The company also raised its full-year 2026 adjusted EBITDA guidance range to $1.185 billion – $1.225 billion, implying a YoY growth of 7% at the midpoint.
That said, despite the favorable long-term outlook for natural gas demand, DT Midstream is not immune to a near-term weakness in markets. If natural gas prices remain weak for an extended period, producers may curtail drilling and production activity, limiting the volumes available to DTM’s gathering systems.
Additionally, the prospects of a potential AI bubble also pose a significant threat. If the data center demand ultimately proves less durable than current trends imply, then the natural gas demand would also grow much more slowly than projected.
Reaves W H & Co Inc, stated the following regarding DT Midstream, Inc. in its Q3 2026 investor letter:
“DT Midstream shares were weak in the quarter alongside domestic natural gas prices, which declined as Permian supply increased. The stock may trade with natural gas prices in the short term, but commodity prices have limited impact on the company’s earnings and growth outlook. We continue to see significant opportunities to expand capacity to serve growing power generation demand in the Midwest and LNG export growth along the U.S. Gulf Coast.”
Click HERE for our detailed analysis of DT Midstream, Inc..
5. Plains GP Holdings, L.P. (NASDAQ:PAGP)
Short % of Float: 8.20%
Market Cap: $5.20 Billion
Plains GP Holdings, L.P. (NASDAQ:PAGP) is a corporate umbrella entity created to hold an indirect, non-economic controlling general partner interest and an indirect limited partner stake in Plains All American Pipeline MLP. PAGP Issues a standard Form 1099 to its shareholders, making it simpler for retail investors who want to avoid the K-1 forms associated with MLPs.
PAA is an integrated midstream infrastructure company that connects crude oil supply to key demand centers in the U.S. and Canada. Its interconnected system of gathering, intra-basin transportation, and long-haul pipelines allows it to transport crude oil from production sites to major marketing hubs like Corpus Christi, Houston, and Cushing.
The midstream operator has been mainly focused on bolt-on acquisitions and recently closed the Silver Creek acquisition for approximately $585 million, expanding its footprint in the Powder River Basin. Another major growth catalyst for the company is the expansion of the Cactus III pipeline by 75,000 barrels per day, which came online in August 2026. In the third quarter, the firm also announced a 10-year agreement with a large integrated producer to expand its Permian Midland gathering system. However, that will not contribute until the fourth quarter of 2027.
That said, Plains All American is among the large midstream operators with the highest commodity-related exposure, up to 15% of its EBITDA. While this has worked in the company’s favor in the current high-priced environment, it will be a major headwind when oil prices normalize. Additionally, most of the firm’s pipelines and volumes come from the prolific Permian Basin, so a potential slowdown in drilling and production activity if crude prices fall could also hurt earnings.
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4. Chord Energy Corporation (NASDAQ:CHRD)
Short % of Float: 8.20%
Market Cap: $7.84 Billion
Chord Energy Corporation (NASDAQ:CHRD) engages in the exploration and production of crude oil, natural gas liquids, and natural gas. The company’s competitive advantage comes primarily from its acreage position, operational efficiency, infrastructure access, and scale.
Chord Energy’s production exceeded the high end of management’s guidance in Q3 2026, prompting the company to raise its full-year 2026 production guidance midpoint from 161,000 to 162,500 barrels per day. This was made possible by the company’s longer laterals, improved completion efficiency, better productivity from existing wells, and AI-assisted optimization. The potential result is lower unit costs, better returns on invested capital, and greater resilience when oil prices normalize.
Chord also continues to focus on operational efficiency, with the company expecting annualized run-rate savings to reach $225 million. This is more than double the amount expected in the initial 2025 update, with the recent increase driven by base production optimization and further marketing improvements. The company also recently announced the divestiture of non-operated Marcellus assets for $550 million, allowing it to concentrate on its core business.
That said, despite the improvements in operational efficiency, Chord Energy remains heavily exposed to commodity prices. A potential decline in global crude prices would significantly hurt the company’s revenue and earnings. This was already demonstrated in the third quarter, when Chord’s average realized crude oil sales price before derivative settlements declined by $8.19 per barrel sequentially to $85.80. This reduced the firm’s quarterly crude oil revenue by around $109 million, although higher production partially offset the impact.
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3. Venture Global, Inc. (NYSE:VG)
Short % of Float: 9.30%
Market Cap: $33.31 Billion
Venture Global, Inc. (NYSE:VG) is a leading US producer and exporter of LNG. The company continues to take advantage of the supply disruptions in the Middle East and delivered its largest-ever quarterly EBITDA of $2.6 billion in its Q3 2026 report on November 10. Revenue also surged by around 43% compared to last year. LNG sales volumes grew by 25% YoY, primarily due to the increased production from Plaquemines as commissioning progressed.
For the first nine months of 2026, Venture Global’s revenue increased by 49%, while adjusted EBITDA surged by 51% YoY. This prompted the company to raise its 2026 EBITDA guidance to $10 billion to $10.3 billion from $8.7 billion to $9.1 billion previously, based on its current market outlook for the remainder of the year. The LNG operator expects the demand from Asian buyers to rise amid continuing geopolitical uncertainty in the Middle East.
Venture Global is also looking to use its energy infrastructure expertise to tap booming demand from the AI data centers. The company is planning to bring on roughly 11.5 GW of data center compute capacity over roughly the next decade through modular “power islands”, and has already signed framework agreements with equipment suppliers. It expects its first compute capacity to come online in late 2028 and projects its data center-related power capacity to reach around 5 GW by the end of 2031.
That said, LNG remains the core business for Venture Global and its earnings remain sensitive to prices of the super-chilled fuel. The company itself estimated in May that even a $1 per MMBtu change in fixed liquefaction fees could impact its full-year 2026 EBITDA by $300 million – $350 million.
VG has also stated that its emphasis is going to shift more to much shorter contracts amid continuing geopolitical uncertainty in the Middle East. While these short-term agreements are favorable when LNG prices are high, they could increase the company’s exposure to unfavorable market conditions if prices weaken.
Venture Global’s legal troubles are also a cause for concern. The company continues to face arbitration claims from some Calcasieu Pass customers, who allege it withheld contracted cargoes to capitalize on higher spot prices. The LNG operator has settled or prevailed in several cases and lost one proceeding. However, there are two more customers who are seeking damages exceeding $2.4 billion, with VG disputing the claims.
Click HERE for our full analysis of Venture Global, Inc..
2. Imperial Oil Limited (NYSEAMERICAN:IMO)
Short % of Float: 9.79%
Market Cap: $60.54 Billion
Imperial Oil Limited (NYSEAMERICAN:IMO) is one of the largest integrated oil companies in Canada. The integrated model gives it some protection against fluctuations in individual commodity markets.
Another important aspect of Imperial Oil is that it is 69.6% owned by ExxonMobil, giving it access to the technological expertise, operational experience, research capabilities, and resources of one of the largest integrated energy companies in the world.
Imperial Oil’s ownership of large Canadian oil sands assets also provides a significant competitive advantage. Unlike conventional oil wells, oil sands mining operations can sustain production for extended periods once developed. The company has an established resource base and infrastructure that would be extremely expensive and time-consuming for a competitor to replicate.
Imperial Oil has benefited from the favorable commodity environment, reporting record net income in Q3 2026. The company’s downstream earnings surged to a record C$1.55 billion, compared to C$444 million in the year-ago period, driven by the exceptionally high refining margins amid the disruptions in the Middle East. However, it is important to keep in mind that these margins are cyclical in nature and can contract significantly when global supplies return to normal. Investors should therefore be careful about extrapolating Q3’s record profitability into future quarters.
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1. PBF Energy Inc. (NYSE:PBF)
Short % of Float: 10.54%
Market Cap: $8.42 Billion
As one of the largest independent petroleum refiners in the United States, PBF Energy Inc. (NYSE:PBF) has benefited from the exceptionally favorable market environment. The stock soared to an all-time high in October, driven by an unusually sharp surge in global refining margins as the ongoing disruptions have significantly reduced the global refining capacity and tightened supplies of gasoline, diesel, and jet fuel.
PBF has capitalized on the opportunity to bolster its balance sheet, reducing its net debt by more than $2 billion this year. The company ended Q3 2026 with about $2.5 billion in cash against $2.1 billion in total debt, giving it a net cash position of $426 million. This is particularly important for a cyclical refiner, as the stronger balance sheet will give it greater capacity to withstand unfavorable market conditions when crack spreads normalize.
That said, the biggest risk to PBF’s investment thesis is that the exceptional refining margins are unlikely to be permanent, and crack spreads could normalize quickly if the global refined product supplies recover. This risk is particularly important for PBF as it has enjoyed an enormous rally and significantly outperformed the wider market this year. As of the writing of this piece, PBF has surged by almost 149% since the beginning of 2026, so even a modest decline in refining margins could trigger a significant valuation correction.
Third Avenue Management, an investment management company, stated the following regarding PBF Energy Inc. in its Q3 2026 investor letter:
“During the third quarter, Fund performance benefited from diversified sources of return. Leading contributors to performance included petroleum refiner PBF Energy Inc.. The single largest contributor to Fund performance for the quarter was PBF Energy. At the time of the Fund’s initial investment, roughly two years ago, we held the view that PBF’s assets, and U.S. refinery assets in general, were at that time earning well below normalized margins and returns. We believed that, given the absolutely critical nature of the assets and a wave of U.S. refining capacity closures in recent years, there was a high probability that the economics of that industry would eventually rise to a level at which reinvestment to maintain the production capacity of the remaining refinery assets could be economically justified…” (Click here to read the full text)
While we acknowledge the risk and potential of PBF as an investment, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than PBF that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock.
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