Not oil companies, but equipment suppliers: who benefits from the new energy security cycle

• Ben Leyland
  Senior Fund manager
  J O Hambro

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. Geopolitical shocks have exposed the vulnerability of concentrated supply routes and dependence on unstable producers, reinforcing the need for more resilient and diversified energy systems.

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: Canada, Norway and Australia are well positioned

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: Focus on suppliers of industrial equipment, turbines, engineering services and infrastructure technologies

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.

This divergence reinforces the importance of diversified LNG infrastructure, both in terms of liquefaction plants at the export end and regasification terminals at the import end.

Canada is a good example. Despite having substantial low-cost gas reserves, limited export infrastructure has historically restricted market access largely to the US. The buildout of LNG facilities on the country’s west coast could materially change this dynamic by enabling faster exports into Asian markets.

Importantly, LNG investment is not an overnight story, with Canadian plants only beginning operations from next year onwards, 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.

Europe: Short-Term Pain, Long-Term Opportunity

Europe is the most exposed region in the short term, given its heavy reliance on imported energy. This vulnerability is precisely why it may become the centre of long term investment. The regions with the biggest short-term problems often become the biggest long-term opportunities, as they are forced to invest aggressively in new infrastructure.

The Ukraine war created a largely European energy crisis; now the Iran conflict has globalised the issue. Asian LNG prices have surged, exposing the vulnerability of countries reliant on long-distance energy shipments. With no single path to energy resilience, different regions will need different solutions shaped by geography, resources and politics.

For investors, the most attractive opportunities are likely to be companies with global expertise, technological leadership and multi-regional exposure – businesses able to deploy their capabilities wherever demand emerges across multiple investment cycles.