Positioning for a continued Hormuz disruption

There is no shortage of directional views on oil prices, but relatively little discussion of how to structure a portfolio to express those views in a coherent, risk-aware way. Given the complexity of a potential US/Iran conflict and disruption in the Strait of Hormuz, I think the “how” matters as much as the “what.”

My positioning is built around a single core assumption: a sustained disruption to Gulf exports would propagate through the entire energy system, not just the front-month crude price. The goal is to capture those transmission mechanisms rather than rely on a single-point bet.

Macro framework:

A closure or sustained disruption of the Strait of Hormuz would likely result in:

– A material global supply shock in crude markets

– Rapid repricing of non-Middle East production

– Acceleration of offshore and international development spending

– Disruptions to shipping routes, insurance, and fleet availability

This is fundamentally a “system stress” scenario. Positioning is therefore spread across production, services, transport, and substitution.

Portfolio structure (approximate allocations):

Offshore drillers (~24%)

– Valaris (~8.3%)

– Seadrill (~8.0%)

– Noble (~7.8%)

These provide exposure to a likely increase in offshore capex. If Middle Eastern supply is constrained, replacement barrels are more likely to come from offshore basins. The key variable here is not spot oil, but day rates and utilization, which can move sharply when capacity tightens.

Exploration & Production (~57%)

– Kosmos Energy (~13.9%)

– SM Energy (~6.4%)

– Chord Energy (~6.3%)

– Crescent Energy (~7.1%)

– Matador (~6.6%)

– Murphy Oil (~7.1%)

– GeoPark (~5.8%)

– Comstock Resources (~5.0%)

This is the primary source of commodity exposure, diversified across offshore, international, and U.S. operators.

The emphasis is on companies with existing production and operating leverage to realized prices. In a supply shock, the market tends to reward immediate cash flow uplift more than longer-cycle development optionality.

Kosmos is the largest position due to its offshore and international mix, which should reprice quickly. GeoPark adds exposure to non-Middle East barrels, while Comstock introduces natural gas sensitivity as part of the broader energy response.

Tankers (~5.6%)

– Scorpio Tankers

The tanker exposure is based less on absolute volume growth and more on dislocation in trade flows. A Hormuz disruption would likely force rerouting toward longer voyages, increasing ton-miles and tightening effective vessel supply. Freight rates tend to respond non-linearly to these conditions, making this a targeted way to express logistical stress.

Infrastructure (~6.5%)

– FTAI Infrastructure (~5.5%)

– New Fortress Energy (~1.0%)

Infrastructure becomes more valuable as the system fragments. Storage, transport flexibility, and LNG logistics all gain importance when flows are disrupted and rerouted. This allocation is intended to capture those bottlenecks and optionality.

Coal / industrial fuel (~5.7%)

– SunCoke Energy

This serves as a hedge against the core thesis. SunCoke is a merchant coke producer tied to steel production, not directly to oil and gas prices. If the conflict de-escalates and industrial activity picks up, stronger steel output would support demand. The contract-based model also provides relatively stable cash flows compared to the more directional energy exposure elsewhere in the portfolio.

Portfolio logic:

The structure is intentionally diversified across different parts of the value chain:

– Upstream for direct price exposure

– Services for capex response

– Shipping for dislocation in trade flows

– Infrastructure for system bottlenecks

– Industrial hedge and contract stability 

The objective is not to maximize sensitivity to a single variable, but to participate in multiple ways the scenario could unfold.

I'm interested in how others are ACTUALLY structuring portfolios around the many different oil price scenarios and where views diverge on transmission mechanisms.