Hormuz blockade is three months old with no end in sight — load up on big oil
The Strait of Hormuz — the shipping lane that handles about one-fifth of the world's oil — has been effectively blocked for over three months. Iran has mined large sections of it, and there is no sign of a diplomatic breakthrough anytime soon.
Idea
Almost a quarter of the world's oil passes through the Strait of Hormuz, and it's been blocked for three months with Iran now confirmed to have mined it. That means oil supply is squeezed and prices are likely to stay high until the conflict is resolved — which doesn't look imminent. Oil producers like Exxon and Chevron collect more revenue for every barrel they sell when prices are elevated, and Occidental Petroleum is a more leveraged bet on oil prices. These companies also pay solid dividends, so you earn income while you wait for the geopolitical situation to play out. History shows that sustained Middle East disruptions tend to lift energy stocks for months, not days.