Last Updated: June 23, 2025, 2:12 AM ET
New York || 11:30 AM ET – On June 22, 2025, Iran’s parliament voted to recommend closing the Strait of Hormuz following U.S. airstrikes on its nuclear facilities, escalating tensions in a waterway that carries 20% of global oil trade (20 million barrels per day) and 20-30% of liquefied natural gas (LNG). While the decision awaits approval from Iran’s Supreme National Security Council and the Supreme Leader, the threat alone has driven WTI crude to ~$78 per barrel and Brent to ~$80, though prices have corrected slightly since Monday’s market opening.
Any disruption to this vital route, which connects the Persian Gulf to the Gulf of Oman and Arabian Sea, could spike Brent crude above $100 per barrel, with analysts projecting $90-$150 in disruption scenarios, sending ripple effects across U.S. stock sectors, boosting energy and defense while pressuring consumer discretionary and airlines.
Which Sectors Are Directly Tied to the Strait of Hormuz?
The Strait of Hormuz is not just a geopolitical flashpoint – it’s a vital artery for the global economy. From a commercial standpoint, any disruption here sends ripple effects across multiple sectors.
The sectors most directly exposed include:
- Energy – Oil and gas producers benefit from rising crude prices due to supply shocks.
- Transportation – Airlines and shipping companies face higher fuel costs and route risks.
- Industrials – Heavy equipment makers and steel firms tied to energy infrastructure may see volatile demand.
- Defense – Heightened geopolitical risk can drive up military spending and defense contracts.
- Oil Tankers & Maritime Insurance – Freight carriers and insurers often see rate spikes amid elevated threat levels.
These sectors represent the first wave of market response during major geopolitical disruptions like a Strait of Hormuz blockade. Their performance is often sector-specific and asymmetric.
Also Read – Top 7 Stocks That May Benefit from a Strait of Hormuz Closure
Energy – Riding the Oil Price Surge
A Strait of Hormuz disruption would tighten global oil supply, boosting prices and benefiting oil and gas producers. The S&P 500 Energy Sector has already gained 9.2% in June 2025, reflecting market anticipation of supply risks.
ExxonMobil (XOM): As a major with diversified global operations, ExxonMobil benefits from rising oil prices and its strong balance sheet. Its Gulf partnerships and U.S. shale assets provide resilience. A $100+ Brent spike could drive further gains, though oversupply from non-OPEC+ producers may cap upside.
Chevron (CVX): Chevron’s exposure to OPEC+ stability and its Leviathan gas platform make it a high-beta play. However, regional exposure increases risk if Iranian retaliation escalates.
APA Corp (APA): This smaller U.S. shale producer has surged 18.52% in June, leveraging agility in domestic production. APA’s lack of direct Middle East exposure makes it a safer bet, but its high volatility requires caution in a de-escalation scenario.
Energy sector ETFs like XLE (Energy Select Sector SPDR Fund) may also outperform the broader market during such disruptions.
Transportation – Mixed Impacts from Fuel Costs and Freight Rates
Transportation stocks face divergent outcomes, with airlines pressured by fuel costs and tankers potentially gaining from rerouting premiums. Higher oil prices increase jet fuel costs, while shipping firms navigate route risks.
Delta Air Lines (DAL): Rising oil prices threaten airline margins, as jet fuel constitutes ~30% of operating costs. A $100+ oil spike could push gas prices to $4.50/gallon, reducing consumer travel demand. DAL, down ~1.5% in June, faces further downside if disruptions persist.
United Airlines (UAL): Similar to DAL, UAL is vulnerable to fuel cost spikes and demand contraction. Its stock has lagged, with a ~0.51% June decline.
Tsakos Energy Navigation (TEN): Tanker firms like TEN benefit from freight rate surges. TEN’s long-term contracts ensure revenue stability, making it a top pick for blockade-related gains.
International Seaways (INSW): INSW’s diversified fleet and balance sheet strength position it to capitalize on VLCC rate spikes. Up ~7.52% in June, INSW offers upside if rerouting persists, though de-escalation could compress rates.
Logistics-focused stocks like FedEx (FDX) and UPS (UPS) might face indirect impacts through higher transportation costs and potential route delays in affected regions.
Industrials – Volatile Demand Amid Energy Shocks
Industrials tied to energy infrastructure face mixed impacts, with demand volatility driven by oil price swings and economic slowdown fears.
Caterpillar (CAT): CAT’s heavy equipment is used in oilfield services, but a blockade could reduce global construction demand if gas prices increase, impacting consumer spending.
Nucor (NUE): Steel demand for energy infrastructure (such as pipelines) could rise with oil prices, but tariffs and inflation risks weigh on NUE. Its stock is up ~15% in June, and a broader market sell-off could exacerbate losses.
Defense – Benefiting from Geopolitical Tensions
Heightened U.S. and Israeli military activity in the Gulf boosts defense contractors, with demand for missile defense and cybersecurity solutions surging.
Lockheed Martin (LMT): LMT’s Patriot missiles and F-35 programs position it for contracts if the U.S. Fifth Fleet escalates operations. LMT is a safe haven amid Strait tensions.
Raytheon Technologies (RTX): RTX’s missile defense systems (for example THAAD) and cybersecurity tech benefit from Pentagon spending. RTX offers stability but faces risks if diplomacy prevails.
Oil Tankers & Maritime Insurance – Capitalizing on Risk Premiums
Tanker firms and insurers thrive on disruption-driven rate hikes and premiums.
Frontline (FRO): FRO’s refusal to sail through the Strait highlights risk, but its large VLCC fleet benefits from a 24% freight rate spike. FRO’s ~3.5% June gain makes it a strong play, though de-escalation could reverse gains.
Chubb (CB): Maritime insurers like Chubb see 30-50% premium hikes for Hormuz routes, boosting margins. Chubb may prove to be a diversified bet.
Broader Market Considerations
A full or partial blockade could send oil prices soaring past $105/barrel, potentially driving U.S. gas prices to $4.50-$6.00/gallon and triggering significant declines across the Dow Jones Industrial Average (DJIA), Nasdaq Composite, and S&P 500.
While the S&P 500 may not experience immediate large-scale volatility, sector-specific movements could be sharp. Past oil shocks- such as during the 1973 Oil Crisis or the 1980s Iran-Iraq tanker war – led to sharp rallies in energy stocks and drawdowns in transportation and consumer discretionary names.
Although military experts debate whether Iran could fully block the strait (due to the presence of the U.S. Fifth Fleet and the waterway’s navigable width), even partial disruption or threats alone have historically spooked markets and moved oil prices.
The Bottom Line
Investors should approach Hormuz blockade concerns critically. Iran has threatened Strait closures since the 1980s without following through, and a blockade would cripple its oil exports to China.
While energy stocks offer upside, investors should avoid chasing volatility, focusing instead on undervalued firms with strong fundamentals and hedging against de-escalation risks.
This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.
Dawson Blake is a financial markets expert with over 10 years of experience, focusing mainly on stock market news and price movements. He aims to become a top-tier authority in curating stock news content that readers can trust as their go-to source for market information. Dawson enjoys breaking down market activity, company updates, and daily trends to help investors stay informed and make smarter financial decisions. His writing is simple, clear, and designed to make the stock market easy to follow for everyone.