Energy is another surprisingly clean sector for Shariah investing. Extracting, refining, and selling hydrocarbons is permissible. Natural resources are considered a gift of Allah that humans are allowed to extract and use for legitimate purposes. The major oil and gas companies don't have captive finance arms like the automakers, don't have the gambling or alcohol exposure of hospitality, and generally maintain reasonable debt ratios.

Most of the supermajors pass Shariah screening. Let me walk through the specific names.

The sector question: extraction is fine

Classical Islamic law permits the extraction of natural resources under the general rule of mubah (permissible activities). Mining, oil drilling, gas extraction, and related activities are allowed as long as the specific methods don't cause prohibited harm.

There's no direct connection between oil and gas extraction and any prohibited activity. The oil is used for fuel, petrochemicals, lubricants, plastics, and fertilizer inputs. These end uses are almost entirely permissible. Even the minor portion that goes into beauty products or similar end markets doesn't raise Shariah concerns.

The only time energy companies run into sector issues is when they operate in ways that cause disproportionate environmental harm or when they violate la darar (the no-harm principle). Some environmentally focused scholars have raised concerns about climate impact and particular types of extraction (tar sands, hydraulic fracturing in sensitive areas), but these are not typically treated as sector-level exclusions by mainstream screening bodies.

ExxonMobil (NYSE: XOM)

ExxonMobil is the largest US-listed integrated oil and gas company. Upstream (exploration and production), downstream (refining and marketing), and chemicals.

Core business: Oil and gas extraction, refining, chemicals. Permissible.

Non-permissible income: Very limited. Some interest income from cash holdings. Minimal.

Debt-to-market-cap: Long-term debt around $42 billion against a market cap of ~$450 billion. Debt ratio about 9 percent. Passes easily.

Cash and interest-bearing securities: Moderate. Passes.

Accounts receivable: Passes.

Result: ExxonMobil passes Shariah screening cleanly. It's one of the cleanest supermajors.

Chevron (NYSE: CVX)

Second-largest US-listed oil supermajor. Similar business model to Exxon.

Core business: Integrated oil and gas. Permissible.

Non-permissible income: Minimal.

Debt-to-market-cap: Long-term debt around $21 billion against a market cap of ~$295 billion. Debt ratio about 7 percent. Passes easily.

Result: Chevron passes Shariah screening cleanly.

Saudi Aramco (Tadawul: 2222)

Saudi Arabian Oil Company. Saudi Aramco is the largest oil company in the world by production volume, the most profitable, and has the lowest production costs per barrel of any major producer. Listed on the Saudi stock exchange (Tadawul) since 2019.

Core business: Upstream oil and gas dominant, with downstream refining and petrochemicals. Permissible.

Non-permissible income: Minimal.

Debt-to-market-cap: Aramco carries some debt from issuing dollar bonds and sukuk but the ratio is very low relative to its enormous market cap (~$1.9 trillion). Debt ratio under 5 percent. Passes.

Cash ratio: Passes.

Result: Aramco passes all Shariah screens. As a Saudi company, it's also listed on a market that has explicit Shariah compliance oversight. Tadawul's Islamic Index explicitly includes Aramco. This is one of the most obviously halal large-cap stocks in the world.

Access issue for international retail investors: Aramco is primarily traded on Tadawul. Some international brokers offer access; others don't. Depository receipts and index-based access are available but not universal.

Shell (NYSE: SHEL, LSE: SHEL)

Shell plc, the British-Dutch supermajor. One of the largest by revenue.

Core business: Integrated oil and gas. Permissible.

Debt-to-market-cap: Long-term debt around $68 billion against a market cap of ~$225 billion. Debt ratio about 30 percent. Right at the threshold. Borderline.

Result: Shell is borderline on the debt ratio. In some years it passes, in others it fails. Check current figures carefully.

BP (NYSE: BP, LSE: BP.L)

British Petroleum. Integrated oil and gas.

Debt-to-market-cap: BP has historically carried more debt relative to market cap than Exxon or Chevron. Long-term debt around $56 billion against a market cap of ~$90 billion. Debt ratio about 62 percent. Fails.

Result: BP fails Shariah screening on the debt ratio.

TotalEnergies (NYSE: TTE, EPA: TTE)

French supermajor. Integrated oil, gas, and growing renewables business.

Debt-to-market-cap: Long-term debt around $42 billion against a market cap of ~$165 billion. Debt ratio about 25 percent. Passes.

Result: Total passes. One of the cleaner European supermajors from a balance sheet perspective.

Eni (NYSE: E, BIT: ENI)

Italian integrated energy company.

Debt-to-market-cap: Long-term debt around $30 billion against a market cap of ~$55 billion. Debt ratio about 54 percent. Fails.

Result: Fails on debt.

Equinor (NYSE: EQNR)

Norwegian energy company, formerly Statoil. Integrated oil and gas with growing offshore wind.

Debt-to-market-cap: Long-term debt around $23 billion against a market cap of ~$80 billion. Debt ratio about 29 percent. Just under threshold. Borderline.

Result: Usually passes. Check current figures.

Petrobras (NYSE: PBR)

Brazilian state-owned integrated oil and gas.

Debt-to-market-cap: Long-term debt around $55 billion against a market cap of ~$95 billion. Ratio about 58 percent. Fails.

Result: Fails.

PetroChina (HKEX: 0857, NYSE: PTR), Sinopec (NYSE: SNP, HKEX: 0386), CNOOC (NYSE: CEO)

Chinese state-owned oil and gas companies. Mixed debt situations. Check specific names before investing.

US Shale Producers

ConocoPhillips, EOG Resources, Pioneer Natural Resources (now part of ExxonMobil), Marathon Oil (now part of ConocoPhillips), Devon Energy, Diamondback Energy, Continental Resources, Coterra Energy, and other independent US shale players.

ConocoPhillips (COP): Long-term debt around $18 billion against a market cap of ~$135 billion. Debt ratio about 13 percent. Passes.

EOG Resources (EOG): Long-term debt around $4 billion against a market cap of ~$80 billion. Debt ratio about 5 percent. Passes easily.

Devon Energy (DVN): Long-term debt around $7 billion against a market cap of ~$32 billion. Debt ratio about 22 percent. Passes.

Diamondback Energy (FANG): Long-term debt around $11 billion against a market cap of ~$52 billion. Debt ratio about 21 percent. Passes.

Coterra Energy (CTRA): Long-term debt around $3 billion against a market cap of ~$22 billion. Debt ratio about 14 percent. Passes.

Most US shale producers have cleaned up their balance sheets substantially since the 2014 to 2016 oil price downturn. Many that previously failed on debt ratios now pass.

Oil Services

Schlumberger (SLB), Halliburton (HAL), Baker Hughes (BKR), and other oilfield services companies provide drilling, completion, and production services to oil and gas operators.

SLB: Long-term debt around $11 billion against a market cap of ~$62 billion. Debt ratio about 18 percent. Passes.

Halliburton: Long-term debt around $7 billion against a market cap of ~$30 billion. Debt ratio about 23 percent. Passes.

Baker Hughes: Long-term debt around $6 billion against a market cap of ~$42 billion. Debt ratio about 14 percent. Passes.

Oil services companies generally pass Shariah screening when they maintain reasonable debt levels.

Pipeline and Midstream

Enterprise Products Partners (EPD), Energy Transfer (ET), Kinder Morgan (KMI), Williams Companies (WMB), and other midstream companies operate pipelines, storage, and processing facilities.

Many of these are structured as master limited partnerships (MLPs) rather than C-corporations, which creates some structural considerations. The underlying business (transporting and storing hydrocarbons) is permissible.

Debt ratios: Most midstream companies run with high use to fund infrastructure build-outs. Enterprise Products Partners around 45 percent. Kinder Morgan around 50 percent. Energy Transfer around 65 percent. Most fail the debt ratio.

Some exceptions exist, and the individual analysis matters. Run specific tickers.

LNG Pure Plays

Cheniere Energy (LNG), Tellurian, and other liquefied natural gas exporters. Cheniere is the largest US LNG exporter.

Cheniere Energy (LNG): Long-term debt around $23 billion against a market cap of ~$55 billion. Debt ratio about 42 percent. Fails.

Renewable and Alternative Energy

Companies like First Solar (FSLR), Enphase Energy (ENPH), SolarEdge (SEDG), NextEra Energy (NEE), and others operate in renewable energy.

First Solar (FSLR): Solar panel manufacturer. Clean balance sheet. Passes.

Enphase Energy (ENPH): Solar inverters and batteries. Clean. Passes.

NextEra Energy (NEE): Largest renewable energy operator in the US, also runs Florida Power & Light (regulated utility). Long-term debt very high due to capital-intensive nature of renewable infrastructure. Fails debt ratio.

Clearway Energy (CWEN): Renewable yieldco. Heavy debt. Fails.

Renewables are a mixed bag, often failing on debt due to the capital-intensive nature of renewable infrastructure buildout.

Utilities (natural gas and electric)

Covered briefly here because many utilities have meaningful exposure to oil and gas.

Most regulated utilities (Duke, Southern Company, NextEra, Dominion, Xcel, etc.) fail the debt ratio because the utility model requires massive capital investment funded primarily through debt. Utilities are rarely Shariah-compliant. One exception is Atmos Energy (ATO) which sometimes passes.

ETFs

XLE (Energy Select SPDR): Holds the large energy names. Most of the top holdings (Exxon, Chevron, ConocoPhillips, EOG) pass Shariah screening. But XLE also includes some names that don't. Not a Shariah ETF.

XOP (SPDR S&P Oil & Gas E&P): Exploration and production focused. Mixed Shariah compliance.

Shariah-compliant ETFs (SPUS, HLAL) hold Exxon and Chevron at meaningful weights.

The bottom line

Energy is a cleaner Shariah sector than most investors assume. The supermajors (Exxon, Chevron, Saudi Aramco, Total) and many US shale independents (ConocoPhillips, EOG, Diamondback, Coterra) pass Shariah screening. Oil services companies (SLB, Halliburton, Baker Hughes) also generally pass.

The ones that fail usually fail on the debt ratio (BP, Eni, Petrobras, Shell at times) or because of specific structural issues (midstream MLPs, highly levered utilities).

For Muslim investors wanting energy exposure, ExxonMobil and Chevron are the clean large-cap US options. Saudi Aramco is the obvious choice if you can access Tadawul. ConocoPhillips and EOG are the clean large-cap US independent options. Build a diversified energy sleeve from these and you have solid sector exposure without compromising compliance.

Run any specific ticker through FaithScreener to check current debt ratios. Energy names move based on commodity cycles and it's worth confirming the current figures before buying.

Energy Stocks: ExxonMobil, Chevron, Saudi Aramco , Drilling Through the Methodology