Oil and gas majors’ share prices are surging on the expectation of a windfall from the war in Iran, and a range of smaller companies across the energy industry also look like promising buys, fund managers told Semafor. Shell’s stock hit a record high on Monday, reflecting a trend across the sector.
But while the majors have relatively low production costs, the biggest relative boost in profit could be for smaller producers that focus on more expensive barrels, for example oil sands producers in Canada like Suncor Energy. Companies that own natural-resource royalty rights, like Texas Pacific, “benefit from higher oil prices without having to spend capital expenditures to drill new wells,” Simon Wong, portfolio manager at Gabelli Funds, told Semafor.
And even once the Strait of Hormuz reopens, “the clearest and most durable winners,” said Henry Hoffman, co-portfolio manager of the Catalyst Energy Infrastructure Fund, will be US exporters of liquified natural gas, like Venture Global, and of the ingredients for petrochemicals, like Energy Transfer. “Shipping insurance costs will remain elevated and lingering reliability concerns from potential one-off harassments could persist well after any ceasefire,” Hoffman said. “This dynamic creates a lasting shift toward US supplies as the preferred, lower-risk alternative.”
