Portfolio Manager Insights

Investing in energy firms that can grease supply disruption

The tenuous flow of energy products through the Strait of Hormuz has Fidelity’s John Sheehy taking a fresh look at companies that could benefit from higher demand for alternatives to oil.

By: John Sheehy
Updated: 10/19/2026
  • Since the decline in energy-tanker traffic through the Strait of Hormuz, a key waterway through which about 20% of the world’s oil and natural gas passes, Fidelity Portfolio Manager John Sheehy has been investing in energy companies he believes are well-positioned amid increased demand for alternative sources of supply.
  • “I expect countries that rely on the strait to reduce that dependence on what has been a key bottleneck since early 2026,” says Sheehy, who manages Fidelity Advisor® Equity Dividend Income Fund. “Beyond that, I think sovereign nations likely will take a hard look at their entire energy supply chain, with an eye toward making it more resilient and less vulnerable to disruption.”
  • In overseeing the yield-oriented portfolio, Sheehy’s investment approach is rooted in his belief that dividends contribute a significant portion of total return over time and that a portfolio of stocks with above-market dividend yields and growth, combined with below-average valuations, can match or exceed the performance of the broad market over a full market cycle, while exhibiting lower volatility.
  • The range of possible outcomes for the ongoing conflict in Iran remains wide, says Sheehy, ranging from a rapid normalization of tanker traffic through the strait to continued flare-ups of violence that result in intermittent partial or complete closures of this vital waterway.
  • Against this backdrop, he recently increased the fund’s position in Houston-based Cheniere Energy, a key supplier of liquefied natural gas, and a company he believes is positioned to benefit from demand related to supply restrictions in the Strait of Hormuz. Cheniere owns and operates the Sabine Pass LNG terminal in Cameron Parish, Louisiana, and the Corpus Christi LNG terminal on the Texas Gulf Coast. Importantly, Cheniere is the No. 1 LNG exporter in the United States.
  • According to the International Energy Agency, about 93% of Qatar’s and 96% of the United Arab Emirates’ LNG exports transit through the Strait of Hormuz, accounting for roughly 19% of global LNG trade. Sheehy believes countries seeking more reliable sources of that commodity could shift additional business to Cheniere Energy – an outsized position in the portfolio as of August 31, 2026.
  • Sheehy also cites his overweight in ExxonMobil Holdings. In general, he aims to limit the fund’s exposure to large, integrated energy companies, as these stocks tend to be sensitive to crude oil and natural gas prices.
  • However, he favors certain large, dividend-paying energy firms with what he believes are long-duration, low-cost assets, including ExxonMobil and Shell, two of the fund’s top holdings, as they could help soften the blow during a weaker commodity market should the bottleneck in the strait ease.
  • “Cheniere has the ability to capture increased demand while the strait is restricted or closed,” says Sheehy, “while ExxonMobil and Shell have diverse businesses and project portfolios that could enable them to grow even in a volatile energy environment.”
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