Oil chokepoint shut, inflation spiking — load up on energy stocks while they're still hot
The Strait of Hormuz — the world's most important oil shipping route — has been shut down since the Iran war began in February, causing a severe global energy shock. Even if a ceasefire happens soon, analysts warn that cheap oil below $60 may be gone for good.
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The Strait of Hormuz closure has choked off roughly 20% of the world's oil supply, and even a ceasefire may not bring back cheap energy. France and Spain just reported their highest inflation in two years, partly because oil prices remain elevated, and the ECB is now warning about rising inflation expectations. When energy costs stay high this long, oil stocks and oil-tracking funds tend to keep climbing as markets price in a 'new normal' of higher prices. Major oil companies like Chevron and ExxonMobil directly benefit from every dollar added to the price of crude.