5 Ripple Effects From the Strait of Hormuz Blockade Affecting Energy Stocks

By Lee Samaha – Mar 25, 2026 at 3:05PM ESTKey PointsThe lack of crude oil and LNG flows through the Strait is severely affecting global energy markets. Refining crack spreads are soaring as gasoline prices rise. Fertilizer prices and shipping rates continue to rise.The price of oil is clearly being heavily influenced by speculation about developments in the Persian Gulf, specifically the closure of the Strait of Hormuz to commercial traffic. It's important to remember that this isn't simply a question of the U.S. ceasing attacks on Iran. It's Iran that is refusing to allow traffic through, and the threat to energy infrastructure in the Persian Gulf remains, so even if it's reopened, it's unclear when energy flows will return to pre-conflict levels. In this context, here are some ways the closure will affect energy-related companies and how to protect a portfolio against these risks. This is not the place to discuss geopolitics, but it is the place for retail investors to discuss the growing risk posed by recent hostilities and the stocks that can help navigate risk. Image source: Getty Images. 1. Crude oil supplies According to the International Energy Agency (IEA), 25% of the world's seaborne oil flows through the Strait, and the prospect of its loss has sent oil prices soaring. The obvious place to start in this context is to buy U.S.-focused exploration and production companies. Devon Energy DVN +0.28% and Diamondback Energy (FANG 0.53%) are great stocks to play this theme. Both produce in the U.S. and have shareholder-friendly capital return polices. 2. Liquefied natural gas (LNG) shipments It's not just crude oil that typically flows through the Strait. About 20% of global LNG trade flows through it. In addition, Iran has hit and specifically threatens to hit energy infrastructure in the region, so even if the Strait is reopened, it's not clear when LNG trade will normalize. While 90% of LNG that goes through the Strait typically ends up in Asia, a shortage will create a gap, resulting in higher prices worldwide. That's an acute problem for Europe, which has voluntarily reduced its LNG purchases from Russia. One answer to the problem is to buy crude oil and LNG from Norwegian energy giant Equinor (EQNR +1.23%). Norwegian energy exports to the European Union (Norway is not a member) boomed following the Russian invasion of Ukraine, and the country -- and its largest energy company, Equinor -- are primed to benefit in the current environment. In a similar vein, Australian energy company Woodside Energy (WDS 2.85%) has an opportunity to fill the LNG gap by supplying it to Asian countries. Image source: Getty Images. 3. The refining crack spread is soaring Refining stocks such as PBF Energy (PBF 1.48%) and Valero Energy (VLO 3.00%) are up significantly in 2026. Those moves might seem surprising, given that they buy crude oil to refine into gasoline and other refined products. That said, the key metric for refiners is the crack spread -- the spread between the price of oil per barrel and what it's able to sell as a finished product. PBF data by YCharts. The most widely followed crack spread is the 3-2-1 spread. This isn't an impenetrable riddle. It measures the theoretical spread between the price of two barrels of gasoline and one barrel of diesel compared to three barrels of crude oil. Having started the year at around $20, the 3-2-1 spread is currently above $58, as a lack of refined product from the Persian Gulf and a lack of crude oil supply have left Asian refiners holding the booby prize. 4. Fertilizer prices are soaring The blockade of the Strait has also left many fertilizer-laden ships stranded, and prices for chemical fertilizers (made from natural gas) have soared. That's a major problem for Asian and African countries reliant on fertilizer from Gulf countries. With fertilizer prices rising, investors are turning their attention to U.S. producers like CF Industries CF +0.94%, which have manufacturing plants in the U.S., Canada, and the U.K. and source gas from North America. 5. LNG shipping rates The lack of LNG shipping through the Strait is forcing a significant readjustment in LNG shipping routes, which is a major benefit for LNG shipping company FLEX LNG (FLNG 2.27%). The company's near-10% dividend yield makes it one of three high-yield stocks benefiting from the realignment of the energy supply chain caused by the blockade. If Asian countries can no longer source LNG from the Gulf, LNG shipping routes will inevitably lengthen, as LNG will need to come in through different routes. That will extend ships' days at sea and keep ship utilization high. That's a positive for FLEX LNG, and particularly so given its modern, more efficient fleet of ships.Read NextMar 21, 2026 •By Reuben Gregg Brewer3 Possible Oil Price Scenarios For 2026Mar 18, 2026 •By Austin SmithPrediction-Oil Will Stay Above $90 Through 2026 and These 2 Stocks Will Profit MostMar 17, 2026 •By Austin Smith5 Energy Stocks That Have Doubled Down on Dividends Since Oil Crossed $80Mar 16, 2026 •By Austin Smith1 Monster Energy Stock to Hold for the Next 20 Years (And Shares Are Still Under $50)Mar 14, 2026 •By Lee SamahaOil Stocks Are Surging. Here Are 2 to Buy and Hold for Decades.Mar 11, 2026 •By Reuben Gregg BrewerCrude's Sudden Rally Raises the Stakes for These 2 Energy StocksAbout the AuthorLee Samaha is a contributing Stock Market Analyst at The Motley Fool covering industrials, electricals, energy, materials, transportation, and infrastructure stocks. Prior to The Motley Fool, Lee was a Civil Engineer and Investment Manager. He holds a Bachelor of Civil and Structural Engineering from Southampton University and a Certificate in Investment Management from Chartered Institute for Securities & Investment. Lee first cut his investing teeth on The Motley Fool bulletin boards (commonly referred to as the “Fool Boards,”) and he’s infinitely grateful to all of the investors he learned from in this powerful investing community.TMFSaintGermainX@LeeSamahaStocks MentionedDevon EnergyNYSE: DVN$50.41(+0.28%)+$0.14Equinor AsaNYSE: EQNR$40.44(+1.23%)+$0.49Diamondback EnergyNASDAQ: FANG$195.75(-0.67%)-$1.31Valero EnergyNYSE: VLO$234.50(-3.00%)-$7.25CF IndustriesNYSE: CF$128.11(+0.94%)+$1.19PBF EnergyNYSE: PBF$49.35(-1.48%)-$0.74Woodside Energy GroupNYSE: WDS$23.65(-2.85%)-$0.70Flex LngNYSE: FLNG$30.19(-2.27%)-$0.70*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.