A Donald Trump presidency has clear winners and losers. So far, in the aftermath to Wednesday’s shock presidential win the Mexican peso and US treasuries have come under pressure as Trump’s pro-business policies ignite buying in global equities tied to growth cycles.

Clear beneficiaries from improving growth sentiment are resources stocks BHP Billiton Limited (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG), which all stand to benefit if Trump can follow through on implementing policies for increased government and infrastructure spending.

Another sector which appears poised for an uptick if economic activity grows is the oil and gas sector. Woodside Petroleum Limited (ASX: WPL) is my pick in that sector.

Oil begets inflation

Investors must remember that inflation and oil prices are inextricably linked. As oil prices move up or down, inflation follows in the same direction given oil is a major input in the economy. Put simply, if the cost of input increases, so too does the end product. The opposite is also true.

If Donald Trump lifts fiscal spend by delivering on his promised infrastructure spending program, I believe it’s more than likely that oil prices will also rise as US inflation grows through stimulus measures.

If pre-election rhetoric is to be believed, however, it is possible that Trump’s pledge to reinstate sanctions on Iran, renew ties with Russia and lift oil exploration regulations in America could increase oil supply leading to a lower oil price. Nevertheless, I believe Trump’s other business-friendly policies (like corporate and individual tax cuts) should spur spending and increase oil demand.

Accordingly, I’m inclined to see an upside to oil under Trump’s presidency.

Why Woodside?

In my mind, Woodside remains best placed to capitalise on any increase to crude oil prices, given its enviable balance sheet strength. Woodside’s strong balance sheets enables it to acquire distressed companies or quality assets if oil prices continue to fall, whilst delivering high-quality operational perforamance.

In its 2016 half-year report, Woodside reported positive free cash flow of US$167 million despite depressed oil prices during the period. Although half-year net profit after tax (NPAT) sunk 50% to US$340 million, Woodside limited declines through increased production and lower input costs. This is something which many of its peers could not do.

Notably, Woodside ended the half in a strong net asset position with gearing sitting at a comfortable 23% of enterprise value. If oil prices increase, I’d expect management to share this strength with its shareholders by both reducing debt levels and increasing dividend payouts through its ample free cash flows.

Foolish takeaway

If oil prices rise, investors will undoubtedly find value buying stocks like Oil Search Limited (ASX: OSH), Origin Energy Ltd (ASX: ORG) and Santos Ltd (ASX: STO) today.

However, given the strength and size of Woodside’s balance sheet, I find it hard to look past this quality blue-chip company as the best way to gain oil exposure. That’s why I rate it as a buy today.

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Motley Fool contributor Rachit Dudhwala owns shares of Fortescue Metals Group Limited, Origin Energy Limited, and Santos Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.