Energy resilience: The next long-term investment theme

While it is unclear how long the conflict in Iran or disruptions through the Strait of Hormuz will persist, one conclusion is already clear: greater energy self-sufficiency is becoming a strategic imperative – by Ben Leyland, Senior Fund Manager of the J O Hambro Global Opportunities fund

 
Markets have initially focused on higher oil and gas prices, supply disruptions and short-term windfall profits for commodity producers. But the more important long-term implication is the accelerating shift towards energy resilience, diversification and domestic supply security.

Even if the Strait of Hormuz reopened tomorrow, the strategic focus would remain on future-proofing infrastructure, securing supply chains and reducing reliance on geopolitically volatile regions and fossil fuels more broadly. As a result, capital expenditure is likely to accelerate most rapidly in the regions currently most exposed as governments and industries strengthen long-term energy security.

The opportunity spans five key areas: domestic energy production, LNG infrastructure, renewables, nuclear power and electrification.
 
1.  Increasing domestic production
 
Countries with the geological capacity to produce more oil and gas closer to home are likely to benefit. The US is already energy self-sufficient but other Western producers, including Canada, Norway and Australia, are positioned to benefit. This is not a return to fossil fuel dependence, rather it reflects a pragmatic need to reduce reliance on unstable suppliers such as the Middle East, Russia and OPEC/ OPEC+ nations.

Domestic production offers security, predictability and insulation from geopolitical shocks. For investors, it also creates opportunities in the companies that support extraction, transportation and field development.
 
2.  Expanding LNG infrastructure
 
Another key theme is the globalisation of the natural gas industry through the construction of liquefied natural gas (LNG) infrastructure, which would appear to have been given another leg of growth from the crises.

Recent price movements highlight the strategic imbalance. Since the conflict escalated, European gas prices have risen sharply, while Asian LNG benchmarks have seen even greater disruption due to their reliance on long-distance Middle Eastern shipments. By contrast, US gas prices have remained relatively insulated thanks to abundant domestic supply.

The more compelling medium-term opportunities may lie not with commodity producers, but with suppliers of industrial equipment, turbines, engineering services and infrastructure technology. Many of these businesses also benefit from recurring long-term service revenues once installed assets become operational, creating potentially more durable earnings streams than direct commodity exposure.
 
3.  Renewables: a second wave?
 
Renewables enjoyed an ESG-driven surge of enthusiasm five to ten years ago and then stagnation amidst rising interest rates, inflation and project execution challenges.

Now, geopolitical uncertainty may create the conditions for a second wave in wind and solar deployment, this time driven less by decarbonisation targets and more by energy security and industrial competitiveness. Countries which invested early in renewables, and as a result enjoy lower and more stable power prices, are now seeing the benefits.

There is growing evidence of a pick-up in order growth for both onshore and offshore wind projects. The question now is whether the industry can learn from the first boom-bust cycle and establish more sustainable industry economics and contract structures.
 
4.  Nuclear power’s renaissance
 
Nuclear energy is already re-entering the conversation as the need for reliable, low-carbon baseload power becomes harder to ignore. Even Germany and Japan, which moved away from nuclear after Fukushima in 2011, are reassessing its role in long-term energy resilience.

Like LNG, nuclear is a long-duration infrastructure story, meaning the more immediate beneficiaries are likely to be industrial equipment providers, engineering specialists, and businesses supporting grid modernisation and plant upgrades.
 
5.  Electrification and the rise of EVs
 
Electrification, of transport, heating and industrial processes, is another structural lever for reducing fossil fuel dependence. Electric vehicle adoption in Europe has reached roughly 15% of new car sales, but growth has slowed. The next wave may be driven less by subsidies and more by consumer economics. EVs are increasingly purchased not for environmental reasons but for cost savings and payback periods.

Enterprises are also electrifying. Data centres and industrial facilities are building their own renewable or gas powered microgrids to reduce reliance on national grids. This trend reflects a broader shift toward energy autonomy at both the national and corporate level.

The investment implications extend far beyond auto manufacturers into grid infrastructure, power equipment, semiconductors, industrial automation and energy management systems.