Oil Price Outlook Is Clear as Mud

The safer bet, industry experts say, is that an Iraqi war will trigger a brief spike in oil prices followed by a lasting plunge.

"Assuming there's a quick regime change -- and Iraq floods the market with oil -- that's a long-term negative for oil stocks," said Paul Larson, an oil and energy analyst at Morningstar. "It would be bad for some of the producers."

Larson cautioned investors to stick with the strongest of the lot -- integrated giants, such as Royal Dutch (RD), ExxonMobil(XOM) and British Petroleum (BP), that are virtually debt-free -- because of their limited downside potential. But Flynn, looking instead for upside, recommends Russian oil stocks, such as Yukos.

"The Russians already have big deals with Iraq -- and Russia's not a member of OPEC," Larson said. "The lure of profits will be enough to inspire them to start pumping.

"They're sitting on a gold mine."

If successful, a war against Iraq could unleash the world's second-largest oil reserve. But that new flood of supply could soak American energy companies and their stocks.

"New supply, anywhere in the world, hurts producers everywhere in the world," Goldstein said.

Jon Cartwright, a senior bond analyst at Raymond James, would rather place his bets on natural gas companies, such as Anadarko (APC), Devon (DVN), Magnum Hunter (MHR) and Chesapeake (CHK). Cartwright thinks oil is overpriced -- and that it may remain that way until after a war -- so he's not even looking at oil companies.

"My job here is to buy securities at 50 cents on the dollar," he said. "So I would rather sell some companies benefiting from high oil prices and put that money to work somewhere else."

Thompson said the entire sector is difficult to call.

"I think there's too much uncertainty in the world," he said. "And I think energy stocks are a crapshoot because of that."

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