Late last year, energy was looking like the sector to avoid in 2026 due to a global oil glut. In December, there were 1.4 billion barrels of “oil on the water,” 24% more than the average for December from 2016 to 2024, causing oil prices to drop.

As a result, West Texas Intermediate and Brent were trading $15 below their starting prices in late December. Investors were ditching energy stocks. But as of the second week of February 2026, the energy sector is leading, with the State Street Energy Select Sector SPDR ETF up 23% year to date.

U.S. oil majors like ExxonMobil, Chevron, and ConocoPhillips are soaring. The surge in the energy sector is thought to be linked to aggressive U.S. foreign policy and potential access to Venezuela’s oil reserves. In addition, increased tensions with Iran could impact global oil prices.

Investors are turning to energy stocks as a reliable long-term bet, as AI-related stocks lose appeal. However, caution is advised as it will take years and much capital to fully restore Venezuela’s oil sector, and any conflict with Iran would likely be brief. A wait-and-see approach may be wise.

The Motley Fool Stock Advisor analyst team identified the 10 best stocks to buy right now, with the State Street Energy Select Sector SPDR ETF not making the cut. The team’s total average return of 884% outperforms the S&P 500. Join an investing community built by individual investors for individual investors to stay informed.

Read more at Yahoo Finance: This Sector Is Unexpectedly Crushing the Rest of the Market This Year