Shares of APA (APA 3.02%) rallied 4.1% on Wednesday as of 1:30 p.m. ET, continuing a second straight day of gains for oil stocks.

As was the case yesterday, oil prices leapt higher, albeit off of a low price, as tensions between NATO countries and Russia ratcheted up once again. But this time, the source of increased tensions came from President Donald Trump, in an unexpected reversal from his prior conciliatory tone toward Russia.

Trump gives his blessing to NATO strikes and Ukraine retaking territory

Yesterday, President Trump wrote on Truth Social that:

After getting to know and fully understand the Ukraine/Russia Military and Economic situation and, after seeing the Economic trouble it is causing Russia, I think Ukraine, with the support of the European Union, is in a position to fight and WIN all of Ukraine back in its original form.

The comments reveal a significant about-face for the president, who seemed to be more sympathetic to Russia than Ukraine at the beginning of his term. But it now seems the president is taking an adversarial tone with Russia, which could have implications for oil markets.

In a separate Truth Social post, Trump also advocated for Europe to cease all energy purchases from Russia, noting:

In the event that Russia is not ready to make a deal to end the war, then the United States is fully prepared to impose a very strong round of powerful tariffs… But for those tariffs to be effective, European nations would have to join us in adopting the exact same measures… they have to immediately cease ALL energy purchases from Russia.

Tariffs or sanctions on Russian oil or countries that buy Russian oil could have the effect of lowering supply, which could shoot prices higher, given that Russia accounts for about 10% of all global oil supply. Russia also sells lots of natural gas to Europe, so curtailing that could also boost international natural gas prices as well.

APA is a large upstream oil and gas company with operations outside of Russia, in the U.S., South America, the U.K., and Egypt. So, its production stands to benefit from higher prices if Russia supply is curtailed, either by sanctions or due to Ukraine’s new attacks on Russia storage depots.

Image source: Getty Images.

Think of traditional energy as a dividend-paying hedge

Oil price shocks usually come from geopolitical conflicts, which have the potential to harm the economy — and many of your stocks along with it. However, traditional energy stocks in oil and natural gas can benefit from those shocks, as we saw in 2022. Therefore, APA and its peers can act as a hedge against geopolitical conflict, while the stock also pays out a 4.2% dividend yield in the meantime.