The Long Blockade and the Oil Surge
Let us consider the first plausible path. We could be facing a sustained blockade.
History offers a rather sobering lesson here. Back in the 1980s, during the Tanker War, even partial disruptions in the Gulf caused wild, violent swings in the price of crude. A multi-week closure of Hormuz today would be categorically more severe. Global supply chains are now so painfully optimised that a shock of this magnitude creates a structural bid under the price of oil.
The directional pressure is obvious, though the precise trajectory is anybody's guess.
In a market starved of Middle Eastern crude, desperate buyers will inevitably scramble for alternatives.
This is where the United States enters the fray. America is now the largest oil and gas producer on the planet. When Gulf producers are paralysed, US energy firms could emerge as the most direct beneficiaries.
I was reviewing a rather specific thematic portfolio recently, explicitly the Aftermath of Airstrikes: Defense & Energy Fortification basket, and it made me realise just how exposed traditional portfolios are right now. If you want a proxy for an escalation scenario, Exxon Mobil is perhaps the most glaringly obvious candidate. Exxon is a sprawling supermajor with vast upstream operations in the US. When the crude price rises, the margin on every single barrel Exxon pulls from the ground widens. It is a simple, mechanical relationship that has held true for generations.
Then you have Cheniere Energy. To me, Cheniere is an entirely different but equally fascinating proposition. They are the leading exporter of liquefied natural gas in the United States.
Picture a municipal utility manager in Europe right now. The traditional Gulf supply is severed. The spreadsheets are glowing red. They need natural gas to keep the lights on, and they need it immediately. In this exact moment, American LNG transitions from a simple commodity into a vital lifeline. Cheniere already has the sprawling infrastructure built, meaning they do not need to spend billions and wait five years to capture this sudden surge in demand.
And we must not forget the defence sector. Lockheed Martin sits squarely in the middle of this chaos. As the manufacturer behind the F-35 fighter jet and the HIMARS rocket system, they provide the exact hardware nations clamour for during a crisis. A sustained military confrontation invariably drives demand for precision systems, both from Washington and from terrified regional allies.
