What was said:
The strategic objectives of the US-Israel-Iran conflict remain unclear, leaving markets facing a longer uncertainty window rather than a single geopolitical shock. With shipping through the Strait of Hormuz coming close to a standstill last week and oil infrastructure strikes over the weekend, crude is moving sharply higher, with Brent surging towards some Wall Street estimates of $120.
Several structural dynamics are emerging. China and India are increasing purchases of Russian oil. Every barrel of oil sold by Russia helps fund its war with Ukraine and places further pressure on Europe to accelerate defence spending, strengthen critical infrastructure and re-shore energy dependency.
As defence spending accelerates, supply chains for defence inputs are tightening. Tungsten – critical for modern munitions – contains roughly 15–25% content in tank rounds, 30–60% in armour-piercing rifle bullets and 5–15% in missile fragments. China controls around 80% of global tungsten supply, while Chinese tungsten exports fell roughly 70% last year, tightening availability just as Western defence stockpiles depleted in Ukraine and the Middle East need replenishing.
Helium supply is another unexpected victim of the Middle East conflict. Qatar's production halt at Ras Laffan following Iranian strikes has removed roughly 30% of global supply from the market. Helium shortages historically last 2–3 years because the gas is difficult to store and relies on scarce iso-containers that take 20 months to build. Meanwhile, demand is rising from multiple directions: a single Falcon 9 launch consumes 14–18% of global daily helium output, AI semiconductor fabrication requires helium for wafer cooling, and healthcare accounts for 20% of demand through MRI machines operating at -269°C.
Why we give a ****:
This conflict is reinforcing structural investment themes, not just creating a short-term trade.
First, defence supply chains are tightening as munitions are consumed faster than they can be replaced. Materials like tungsten are becoming strategically important as Western governments try to reduce reliance on Chinese supply.
Second, energy and industrial gases are proving fragile. With roughly 30% of global helium supply temporarily offline and shortages historically lasting 2–3 years, sectors ranging from space launches to semiconductor fabrication and healthcare face supply constraints.
Alongside industrial gases, oil has also become the key transmission mechanism of the conflict. Brent surged toward $120 as shipping through the Strait of Hormuz effectively halted, highlighting how quickly geopolitical shocks can threaten energy security and create inflation pressure across the global economy.
Beyond the immediate price spike, years of underinvestment in oil supply and damage to regional infrastructure are strengthening the case for a multi-year upcycle in oil field services, as facilities across the Middle East will inevitably need repairing or rebuilding once stability returns.
The broader takeaway is that defence inputs, strategic materials and energy infrastructure are increasingly being treated by markets as structural sectors rather than cyclical ones.
Relevant stocks: NASDAQ: ASPI, LSE:CNE, LSE:AET, LSE:HBR, LSE:BP, SSE:600938, LSE:KIST, LSE:BAB,
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