The Energy Security Boom May Continue Long After the Conflict
The strait is narrow, but the energy trade it’s spawned is anything but. Four months into the Iran conflict, with the Strait of Hormuz still choked and diplomatic efforts stalling, global energy markets have entered a sustained reset. The window may stay open far longer than consensus expects.
The sticky supply economics: As Pickering Energy Partners CIO Dan Pickering put it, “The reality is that normal is pretty far off.” With 84M metric tons of LNG capacity still offline and Qatar not expected to fully restore output until 2030, the disruption is likely to last for years, not weeks. Independent E&P companies offer some of the clearest exposure to tighter oil markets, especially as US crude production sits near a record 13.7M barrels per day while oil inventories remain at their lowest level in more than two decades.
- Pickering favors ConocoPhillips, Diamondback Energy, and Occidental Petroleum for their greater leverage to rising oil prices.
- Cheniere Energy and Venture Global could benefit as LNG shortages push the expected supply glut from 2027 to 2030.
The Yield Barrel
The sector also offers compelling income opportunities. Viper Energy yields 5% and boasts 15–20 years of Permian inventory, while Permian Resources offers a 3.2% yield backed by strong free cash flow. Chevron adds a 3.8% yield and diversified exposure across the Permian, Argentina, and deepwater assets. The oil major also returned $6B to shareholders in Q1 2026.
- RBC's Scott Hanold expects US oil production to rise by 400K–500K barrels per day in 2027, following a 200K–300K increase this year.
- Energy demand from AI infrastructure is creating another growth avenue for Riley Exploration Permian and NPK International.
The waiting game: Chevron CEO Mike Wirth recently warned that “the buffers and the shock absorbers are being steadily drawn down, and the ability for the market to absorb this imbalance is drastically diminished.” Rebuilding inventories, restoring Middle East production, and meeting rising AI-driven power demand could support energy profits for years to come. For investors betting on energy demand, the post-war trade may just be getting started.
