How A Strait Of Hormuz Shock Could Ignite A Surge In Energy And Defense ETFs
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 23 2025
0mins
Source: Benzinga
Geopolitical Tensions and Oil Prices: The Strait of Hormuz is facing increased geopolitical pressure, leading to significant spikes in oil ETFs like USO and BNO, following U.S. airstrikes on Iranian nuclear facilities. Experts warn that oil prices could reach $100 per barrel if Iran retaliates.
Investment Shifts Towards Energy and Defense ETFs: Investors are pivoting towards energy-oriented ETFs amid rising oil prices and defense ETFs due to escalating geopolitical risks, with funds like ITA and XAR gaining attention as potential beneficiaries of increased military spending.
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Analyst Views on LMT
Wall Street analysts forecast LMT stock price to fall
12 Analyst Rating
4 Buy
7 Hold
1 Sell
Hold
Current: 616.250
Low
430.00
Averages
535.50
High
605.00
Current: 616.250
Low
430.00
Averages
535.50
High
605.00
About LMT
Lockheed Martin Corporation is a global aerospace and defense company. The Company is engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. Its segments include Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. Aeronautics segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of advanced military aircraft. MFC segment provides air and missile defense systems, manned and unmanned ground vehicles, energy management solutions, and others. RMS segment designs, manufactures, services and supports various military and commercial helicopters, surface ships, sea and land-based missile defense systems, and others. Its Space segment is engaged in the research and design, development, engineering and production of satellites, space transportation systems, and strategic, advanced strike, and defensive systems.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Lockheed Martin Corporation:
Company Overview: Lockheed Martin Corporation is a global aerospace, defense, and security company known for its advanced technology and innovation in military and civilian sectors.
Recent Developments: The company has been involved in various contracts and partnerships aimed at enhancing national security and advancing aerospace capabilities.
Financial Performance: Lockheed Martin has reported strong financial results, driven by increased demand for defense products and services amid global security challenges.
Future Outlook: The company is focusing on expanding its portfolio in emerging technologies, including artificial intelligence and cybersecurity, to maintain its competitive edge in the industry.
See More
Lockheed Martin Secures ~$478M Contract for Submarine Imaging System
- Significant Contract Value: Lockheed Martin's Rotary and Mission Systems has been awarded a ~$478 million IDIQ contract for engineering and technical support of the Integrated Submarine Imaging System for both new and in-service submarines, highlighting strong demand in the defense sector.
- Potential Value Increase: The contract includes options that could raise its total value to approximately $1.19 billion if fully exercised, indicating the company's long-term strategic positioning and profit potential in the submarine technology support market.
- Project Execution Location: Work will be performed in Manassas, Virginia, with an expected completion date of March 2036, providing the company with a stable revenue stream and project management opportunities over the long term.
- Navy Systems Command Oversight: The contract is awarded by the Naval Sea Systems Command, reflecting Lockheed Martin's core position in naval defense and its close collaboration with government entities.
See More
Lockheed Martin and DoW Sign New Agreement to Boost Missile Production
- Production Capacity Boost: Lockheed Martin's framework agreement with the Department of War aims to quadruple Precision Strike Missile (PrSM) production capacity, building on a previous $4.94 billion contract, thereby ensuring American military superiority against any adversary.
- National Security Strategy: This agreement not only supports the national imperative to build a more lethal and resilient fighting force but also allows for the negotiation of a multi-year contract of up to seven years, contingent upon future congressional authorization, further solidifying U.S. defense capabilities.
- Operational Capability Debut: The PrSM was used in combat for the first time during Operation Epic Fury on March 4, showcasing its expanded deep-strike capability and marking the system's operational debut, succeeding the legacy Army Tactical Missile System (ATACMS).
- Investment and Job Growth: Lockheed Martin has invested over $7 billion since President Trump's first term to expand capacity for priority systems, including approximately $2 billion dedicated to accelerating munitions production, creating tens of thousands of high-quality American jobs and advancing the manufacturing and engineering sectors.
See More
Impact of Iran Tensions on Airline Stocks
- Optimistic Airline Outlook: A quick de-escalation of tensions between the U.S. and Iran could lead to significant stock price surges for airlines like Delta Air Lines (DAL), as lower fuel costs would enhance earnings expectations; Delta's shares previously fell 23% during initial conflict escalations.
- Pipeline Stock Potential: In a prolonged stalemate, Enbridge (ENB), the largest natural gas utility in North America, transporting about 30% of crude oil, is expected to benefit from robust energy demand, even as oil prices stabilize at normal levels.
- Defense Stock Growth: Lockheed Martin (LMT) holds a record backlog of $194 billion as of the end of 2025, and an increase in missile orders from the U.S. and Israel could significantly boost its revenue, highlighting strong demand amid geopolitical tensions.
- Reconstruction Opportunities: Should regime change occur in Iran, Caterpillar (CAT), the world's largest construction equipment manufacturer, stands to gain from infrastructure rebuilding efforts; despite current market volatility, Caterpillar's stock has remained relatively stable, indicating its resilience in uncertain times.
See More
Three Scenarios for the Iran Crisis and Investment Strategies
- Quick De-escalation Outlook: President Trump recently indicated “very good and productive” talks with Iran, suggesting that if tensions ease quickly, Delta Air Lines (DAL) could see a significant stock price surge due to lower fuel costs, leading to a notable market rally.
- Prolonged Stalemate Impact: In a scenario of continued stalemate between the U.S. and Iran, while oil prices may stabilize, Enbridge (ENB), a major North American pipeline company, is expected to benefit from robust energy demand, maintaining a stable market performance.
- Escalation and Reconstruction Opportunities: Should the situation escalate leading to regime change in Iran, Caterpillar (CAT), the world's largest construction equipment manufacturer, stands to gain significantly from increased infrastructure investments during the rebuilding phase.
- Anti-fragile Investment Strategy: Given the uncertainty surrounding the Iran crisis, investors should focus on “anti-fragile” stocks, with Enbridge being highlighted as the best choice due to its ability to perform well across various market conditions.
See More
Opportunities in Investing During Uncertainty
- Market Volatility Impact: Geopolitical conflicts have led to significant market volatility, with the S&P 500 dropping approximately 5-10% during the 2022 Russia-Ukraine war, resulting in an estimated $1.3 trillion loss for the global economy, highlighting the profound impact of war on economic stability.
- Historical Recovery Patterns: Despite initial declines, historical data shows that many markets recover a substantial portion of their losses within a year, with sectors like energy, defense, and commodities delivering strong returns, indicating opportunities for long-term investors to accumulate assets at lower valuations during downturns.
- Asset Allocation Strategy: Given the current geopolitical tensions in the Middle East and inflation concerns, investors are advised to diversify across multiple asset classes, particularly in stocks from sectors like defense, energy, and infrastructure, which tend to perform relatively better during market downturns.
- Safe-Haven Role of Gold and Commodities: Gold and commodities typically perform well during geopolitical uncertainty and inflationary periods, with rising oil prices and increased demand for safe-haven assets like gold and silver in 2026, underscoring the importance of diversification in uncertain environments.
See More
Lockheed Martin Corporation:
Company Overview: Lockheed Martin Corporation is a global aerospace, defense, and security company known for its advanced technology and innovation in military and civilian sectors.
Recent Developments: The company has been involved in various contracts and partnerships aimed at enhancing national security and advancing aerospace capabilities.
Financial Performance: Lockheed Martin has reported strong financial results, driven by increased demand for defense products and services amid global security challenges.
Future Outlook: The company is focusing on expanding its portfolio in emerging technologies, including artificial intelligence and cybersecurity, to maintain its competitive edge in the industry.
See More
Lockheed Martin Secures ~$478M Contract for Submarine Imaging System
- Significant Contract Value: Lockheed Martin's Rotary and Mission Systems has been awarded a ~$478 million IDIQ contract for engineering and technical support of the Integrated Submarine Imaging System for both new and in-service submarines, highlighting strong demand in the defense sector.
- Potential Value Increase: The contract includes options that could raise its total value to approximately $1.19 billion if fully exercised, indicating the company's long-term strategic positioning and profit potential in the submarine technology support market.
- Project Execution Location: Work will be performed in Manassas, Virginia, with an expected completion date of March 2036, providing the company with a stable revenue stream and project management opportunities over the long term.
- Navy Systems Command Oversight: The contract is awarded by the Naval Sea Systems Command, reflecting Lockheed Martin's core position in naval defense and its close collaboration with government entities.
See More
Lockheed Martin and DoW Sign New Agreement to Boost Missile Production
- Production Capacity Boost: Lockheed Martin's framework agreement with the Department of War aims to quadruple Precision Strike Missile (PrSM) production capacity, building on a previous $4.94 billion contract, thereby ensuring American military superiority against any adversary.
- National Security Strategy: This agreement not only supports the national imperative to build a more lethal and resilient fighting force but also allows for the negotiation of a multi-year contract of up to seven years, contingent upon future congressional authorization, further solidifying U.S. defense capabilities.
- Operational Capability Debut: The PrSM was used in combat for the first time during Operation Epic Fury on March 4, showcasing its expanded deep-strike capability and marking the system's operational debut, succeeding the legacy Army Tactical Missile System (ATACMS).
- Investment and Job Growth: Lockheed Martin has invested over $7 billion since President Trump's first term to expand capacity for priority systems, including approximately $2 billion dedicated to accelerating munitions production, creating tens of thousands of high-quality American jobs and advancing the manufacturing and engineering sectors.
See More
Impact of Iran Tensions on Airline Stocks
- Optimistic Airline Outlook: A quick de-escalation of tensions between the U.S. and Iran could lead to significant stock price surges for airlines like Delta Air Lines (DAL), as lower fuel costs would enhance earnings expectations; Delta's shares previously fell 23% during initial conflict escalations.
- Pipeline Stock Potential: In a prolonged stalemate, Enbridge (ENB), the largest natural gas utility in North America, transporting about 30% of crude oil, is expected to benefit from robust energy demand, even as oil prices stabilize at normal levels.
- Defense Stock Growth: Lockheed Martin (LMT) holds a record backlog of $194 billion as of the end of 2025, and an increase in missile orders from the U.S. and Israel could significantly boost its revenue, highlighting strong demand amid geopolitical tensions.
- Reconstruction Opportunities: Should regime change occur in Iran, Caterpillar (CAT), the world's largest construction equipment manufacturer, stands to gain from infrastructure rebuilding efforts; despite current market volatility, Caterpillar's stock has remained relatively stable, indicating its resilience in uncertain times.
See More
Three Scenarios for the Iran Crisis and Investment Strategies
- Quick De-escalation Outlook: President Trump recently indicated “very good and productive” talks with Iran, suggesting that if tensions ease quickly, Delta Air Lines (DAL) could see a significant stock price surge due to lower fuel costs, leading to a notable market rally.
- Prolonged Stalemate Impact: In a scenario of continued stalemate between the U.S. and Iran, while oil prices may stabilize, Enbridge (ENB), a major North American pipeline company, is expected to benefit from robust energy demand, maintaining a stable market performance.
- Escalation and Reconstruction Opportunities: Should the situation escalate leading to regime change in Iran, Caterpillar (CAT), the world's largest construction equipment manufacturer, stands to gain significantly from increased infrastructure investments during the rebuilding phase.
- Anti-fragile Investment Strategy: Given the uncertainty surrounding the Iran crisis, investors should focus on “anti-fragile” stocks, with Enbridge being highlighted as the best choice due to its ability to perform well across various market conditions.
See More
Opportunities in Investing During Uncertainty
- Market Volatility Impact: Geopolitical conflicts have led to significant market volatility, with the S&P 500 dropping approximately 5-10% during the 2022 Russia-Ukraine war, resulting in an estimated $1.3 trillion loss for the global economy, highlighting the profound impact of war on economic stability.
- Historical Recovery Patterns: Despite initial declines, historical data shows that many markets recover a substantial portion of their losses within a year, with sectors like energy, defense, and commodities delivering strong returns, indicating opportunities for long-term investors to accumulate assets at lower valuations during downturns.
- Asset Allocation Strategy: Given the current geopolitical tensions in the Middle East and inflation concerns, investors are advised to diversify across multiple asset classes, particularly in stocks from sectors like defense, energy, and infrastructure, which tend to perform relatively better during market downturns.
- Safe-Haven Role of Gold and Commodities: Gold and commodities typically perform well during geopolitical uncertainty and inflationary periods, with rising oil prices and increased demand for safe-haven assets like gold and silver in 2026, underscoring the importance of diversification in uncertain environments.
See More
