The closure of the Strait of Hormuz could potentially increase global inflation by about 1–2 percentage points and reduce global GDP by roughly 0.5–1.0 percentage points, believes wealth advisory firm, ASK Private Wealth in its Newsletter.
In the equity markets, this scenario is not entirely negative, highlighted ASK Private Wealth. Non-Gulf oil producers (like ExxonMobil, Chevron, ConocoPhillips, and EOG Resources), crude and LNG tanker companies (such as Frontline, DHT Holdings, Flex LNG, and Golar LNG), US LNG exporters, and defence contractors (including Raytheon Technologies and Lockheed Martin) are expected to benefit, according to ASK Private Wealth.
The wealth advisory firm suggests that investors should be wary of duration risk: the equity strategy tends to be most effective in the initial 4–8 weeks of disruption. After that period, concerns about demand destruction and the risk of a global recession start to take precedence. Therefore, it’s important to consider position sizing and appropriate hedging.
Non – Gulf Oil Producers – Direct Commodity Upside
Based on the ASK Private Wealth Newsletter, in a scenario where the is closed, equity markets would likely experience notable differences, with non-Gulf oil producers standing out as significant beneficiaries due to their direct involvement with increasing crude prices and absence of supply concerns.
The ASK Private Wealth Newsletter highlighted that a possible closure of the Strait of Hormuz could serve as a significant advantage for global oil producers, especially those operating outside the Gulf, as they would gain from increased crude prices without experiencing supply interruptions.
Major integrated companies like and Chevron are well-equipped due to their size, strong presence in the Permian Basin, and varied global assets, with rising oil prices substantially enhancing free cash flow and bolstering shareholder returns. Companies that focus on upstream operations, such as ConocoPhillips and EOG Resources, exhibit even greater responsiveness to fluctuations in crude prices, due to their low breakeven costs and direct exposure to oil, free from refining margin challenges.
In the meantime, Devon Energy distinguishes itself with its variable dividend approach, converting rising prices into prompt returns for investors, while TotalEnergies offers a well-rounded opportunity via its diverse energy portfolio and LNG assets, enabling it to take advantage of increases in both oil and gas prices amid a disruption-driven landscape, as noted by the ASK Private Wealth Newsletter.
Tanker Companies – Route Rerouting Creates rate Supercycle
As highlighted in the ASK Private Wealth Newsletter, a blockade of the Strait of Hormuz would greatly affect global oil transportation, necessitating that crude shipments be redirected around the Cape of Good Hope, which would significantly elevate ton-mile demand and constrain tanker availability—factors that generally lead to a surge in freight rates.
In this situation, tanker firms such as Frontline plc are likely to gain the most, owing to their status as the largest operator of VLCCs globally, with direct exposure to spikes in spot rates.
The ASK Private Wealth Newsletter highlighted that DHT Holdings, with its exclusive VLCC fleet, is well-positioned for immediate growth as Middle East shipments are redirected around Africa. International Seaways provides a more diverse exposure through its varied fleet of both crude and product tankers, which allows it to capitalize on profits across different segments.
On the other hand, ASK Private Wealth Newsletter mentioned that the Tsakos Energy Navigation offers a relatively balanced strategy, merging steady charter coverage with significant spot market exposure, permitting it to take advantage of increasing rates while still ensuring some earnings predictability.
LNF Shipper & Non- Gulf LNG Producers – Gas Market Dislocation
According to the ASK Private Wealth Newsletter, a closure of the Strait of Hormuz would significantly disrupt global LNG flows, particularly affecting Qatari exports and leading to a sharp imbalance between supply and demand in the gas market. In this situation, non-Gulf LNG producers and shipping firms would likely benefit the most due to a shortage in both cargo availability and shipping capacity.
Companies such as Flex LNG are positioned advantageously to benefit from a decrease in vessel supply, as their modern fleets of LNG carriers on long-term contracts are experiencing increasing asset values and enhanced earnings visibility.
Additionally, the ASK Private Wealth Newsletter highlighted that Golar LNG is notable for its integrated role in LNG shipping and floating liquefaction (FLNG), enabling it to extract value throughout the supply chain during times of disruption. At the same time, New Fortress Energy serves as a viable US-based LNG supplier, with its infrastructure and production capabilities becoming increasingly essential in serving markets lacking Gulf-sourced gas, positioning these companies to take advantage of high LNG prices and persistent shortages.
Defence & Aerospace – Elevated Geopolitical Spend
ASK Private Wealth Newsletter said that a crisis in the Strait of Hormuz would lead to increased defense expenditures, benefiting companies such as Raytheon Technologies and as the demand for missile systems, air defense, and advanced fighter jets rises with growing tensions.
BAE Systems stands to benefit from its solid relationships throughout the Gulf region, while L3Harris Technologies will profit from the heightened need for communication and electronic warfare systems. Furthermore, Cheniere Energy is positioned as a crucial alternative LNG supplier, with its exports becoming vital for global energy security, even with a relatively stable fee-based revenue structure.
US Midstream & Pipeline Infrastructure – Domestic Price Differentials
The ASK Private Wealth Newsletter indicated that any disturbances in the Strait of Hormuz would raise the strategic significance of US midstream infrastructure, favoring companies such as Kinder Morgan, Enterprise Products Partners, and Energy Transfer. An increase in global oil and gas prices, along with rerouted trade routes, would elevate the need for US export capabilities and domestic pipeline throughput.
According to the newsletter, these companies, which have extensive networks connecting shale formations to Gulf Coast export terminals, are poised to benefit from increased volumes and enhanced pricing dynamics as the US establishes itself as a vital alternative supplier to compensate for interruptions in energy supplies from the Middle East.
European Refiners – Margin Expansion on Supply Diversification
The ASK Private Wealth Newsletter indicated that in a scenario where there is a disruption in the Strait of Hormuz, European refiners with adaptable crude sourcing can enhance their margins by shifting to Atlantic Basin and African resources as global product prices rise.
As per the newsletter, companies such as Neste benefit from a varied feedstock sourcing strategy and gain a protective advantage through their renewable fuels offerings. Additionally, Saras is well-equipped to take advantage of its Mediterranean positioning and flexible crude sourcing capabilities, enabling it to exploit favorable pricing differences compared to competitors that depend on Gulf supplies, thus bolstering refining margins and profitability.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.