Oil Shock, Rising Rates, High Inflation: 3 Sectors Poised to Benefit

About one-fifth of globally traded oil passes through the Strait of Hormuz, and the current geopolitical escalation is not limited to a single chokepoint. Disruptions are spreading across multiple key Middle East shipping lanes. Security concerns are increasingly affecting routes such as the Bab el-Mandeb Strait (a key link between the Red Sea and the Gulf of Aden and the broader Red Sea shipping corridor). Together, these routes handle a substantial share of global energy shipments and container trade, amplifying the scale of supply-side risks.

The resulting surge in crude prices is once again adding to inflationary pressures, even as major central banks maintain a “higher-for-longer” policy stance. Elevated interest rates and firm bond yields are tightening financial conditions, putting downward pressure on equity valuations.

Cross-Asset Volatility Reshapes Market Dynamics

Global financial markets are thus navigating one of the most complex macro regimes in decades, marked by cross-asset volatility and shifting capital flows. Safe-haven demand has surged simultaneously, driving gold to record highs and reflecting a clear investor pivot toward capital preservation amid heightened uncertainty.

Sectoral Divergence Driving Equity Performance

Investors are increasingly rotating toward commodities and real assets as hedges against inflation and currency volatility. In this environment, equities are no longer moving at the same pace and sectoral divergence is widening, with energy, defense and resource-linked industries emerging as key beneficiaries of the evolving geopolitical landscape.

30-Day Price Performances of the Sectors

Image Source: Zacks Investment Research

Energy (Upstream Oil & Gas, LNG)

The most immediate beneficiary of the crisis is the energy sector, as oil prices have surged sharply in recent weeks amid supply disruptions, with an estimated 20 million barrels per day (U.S. Energy Information Administration data) at risk due to Hormuz-related constraints. This surge has two key implications. First, energy companies typically show a strong correlation with oil prices, leading to significant expansion in revenue and cash flow, which directly boosts earnings and free cash flow. Second, the supply outlook remains tight, with limited spare capacity and ongoing logistical bottlenecks, such as tanker availability and refining constraints, indicating that elevated prices could persist longer than in typical geopolitical spikes. At the same time, Liquefied Natural Gas (LNG) markets are also tightening, particularly in Asia, as supply disruptions and the rerouting of shipments further strain availability.

Two stocks under investors’ radar right now are Exxon Mobil XOM and Cheniere Energy LNG. Each stock presently carries a Zacks Rank #3 (Hold).

Precious Metals & Mining (Gold, Silver)

Gold’s surge reflects a combination of geopolitical hedging and monetary uncertainty. With inflation risks rising again due to energy shocks and central banks delaying rate cuts, real yields remain volatile. However, geopolitical stress has outweighed these rate headwinds, pushing gold to record highs. Demand is being supported by multiple structural drivers, including increased safe-haven buying amid war, shipping disruptions and financial market volatility. At the same time, de-dollarization trends are gaining traction, with several emerging economies boosting gold reserves to hedge against currency risks. Currency pressures in oil-importing nations such as India are also contributing to stronger gold demand. Notably, gold continues to attract inflows despite elevated interest rates, signaling a shift from cyclical to more structural demand dynamics.

Stocks like Franco-Nevada FNV with a Zacks Rank #1 (Strong Buy) remain well positioned to benefit, as higher realized gold prices are likely to drive operating leverage, supporting earnings growth and margin expansion. You can see the complete list of today’s Zacks #1 Rank stocks here.

Defense & Strategic Infrastructure

The defense and security sector is also emerging as a key beneficiary of rising geopolitical tensions. Ongoing conflicts and global fragmentation are driving higher military spending across regions, along with increased focus on protecting energy infrastructure and shipping routes. Investments in cybersecurity and surveillance are also picking up, and such environments typically support long-term defense spending growth. At the same time, disruptions in shipping and energy logistics are increasing demand for maritime security, naval systems and alternative supply routes. Higher tanker costs and rerouting challenges are further highlighting the need for stronger and more resilient infrastructure.

In this context, companies like Lockheed Martin LMT and RTX Corporation RTX, both carrying a Zacks Rank #3, are well positioned to benefit. Overall, defense contractors and infrastructure players tied to energy security are likely to gain from long-duration government contracts, strong backlog visibility and stable cash flows, offering a defensive growth profile amid ongoing macro volatility.

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Lockheed Martin Corporation (LMT): Free Stock Analysis Report

Exxon Mobil Corporation (XOM): Free Stock Analysis Report

Cheniere Energy, Inc. (LNG): Free Stock Analysis Report

Franco-Nevada Corporation (FNV): Free Stock Analysis Report

RTX Corporation (RTX): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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