Energy Sector: Focus on Long-Term Themes

By Vigilant Wealth Management on April 29, 2026

Energy Has Become Top of Mind Right Now

Recent events in the Middle East have brought energy back to the forefront for investors and consumers. The war in Iran has renewed concerns around supply disruptions, shipping routes, and fuel prices. Before this, the war in Ukraine had already demonstrated how vulnerable global energy systems can be in periods of geopolitical stress. That backdrop is one reason clients are asking more about the Energy sector today.

In our view, recent events have made the topic of energy investing more immediate, but our investment thesis remains broader and longer lasting. We see it as grounded in two themes: increased spending on resource security and growth in electricity demand driving investment in energy sourcing, infrastructure, and transmission.

Energy: Supply and Demand in the Short-Term

Up until the war began in Iran, global energy markets were modestly oversupplied, meaning that energy production was higher than current demand. That changed quickly when the Strait of Hormuz became effectively closed to any oil and natural gas transportation. The shutdown stranded approximately 2,000 energy carrying tankers with a total of 100 million barrels of oil equivalent. Before this, the closed waterway supplied global energy markets with up to 20% of the daily need and fueled up to 35% of the world’s refining capacity. The war is impacting Asian and European energy markets the most, creating shortages in fuels, including liquefied natural gas (LNG) and jet fuel. The chart below shows the deficit in oil.

Oil markets are more focused on the question of duration of the war than on the use of energy reserves and supply releases. Importantly, as measured by energy futures, traders are expecting the conflict in Iran to be short-lived. Oil futures prices are over $94 per barrel in the next month but decline to $86 by August and $78 by year-end. Day-to-day news can change the price situation quickly. Any escalation and extension of hostilities in Iran could send energy prices even higher and for longer. A de-escalation could have the opposite effect. This is why we remain focused on our longer-term energy themes for portfolios.

Energy: Themes Beyond the Short-Term

Theme One: Resource Security is Driving Capital Spending

A few years ago, the war in Ukraine materially changed how policymakers and markets think about energy dependence. The International Energy Agency (IEA) notes that Russian supply accounted for roughly one-third of the European Union gas supply before the 2022 invasion, exposing how vulnerable a region can become when too much fuel comes from a concentrated source. The result has been a broad push toward diversification: more liquefied natural gas (LNG) imports from new sources, more storage, more system resilience, and more optionality in how energy is produced and delivered.

The conflict involving Iran highlights a different version of the same issue. A meaningful share of global oil and LNG trade still moves through an especially geopolitically sensitive route like the Strait of Hormuz. That does not mean every disruption becomes a lasting shortage, but it does reinforce a durable conclusion: countries, utilities, and large industrial users place a higher value on dependable supply than they did when energy security seemed less urgent.

That shift matters for investors because resource security is not just an upstream story. It can support capital spending across pipelines, storage, LNG export and import infrastructure, field services, grid hardening, and other parts of the energy system that make supply more reliable and flexible.

Theme Two: Growing Demand for Electricity Requires Many Sources of Supply

The second theme relates to energy demand. Electricity use is rising as economies digitize, manufacturing activity expands, transportation electrifies, and data centers require more power. In a 2025 report, the IEA estimated that electricity consumption from data centers globally was about 415 terawatt-hours in 2024 and could rise to roughly 945 terawatt-hours by 2030. In the United States, the agency expects data centers to account for almost half of electricity demand growth through 2030.

The U.S. Department of Energy is making the same point from a grid-planning perspective. It says rising electricity demand is being driven mainly by data center expansion, AI applications, domestic manufacturing growth, and electrification. In other words, the demand story is not limited to one end market. AI may be the newest catalyst, but it sits on top of several other long-term drivers already pushing power demand higher.

Meeting that demand requires more than just additional fuel production. It also requires storage, transformers, generators, transmission lines, off-grid solutions and distribution upgrades. Transmission constraints remain one of the most significant barriers to meeting growing U.S. energy demand, according to the DOE. That is why we think the opportunity set extends beyond traditional energy producers and into the infrastructure needed to move and manage power.

Why Natural Gas and LNG Matter

We continue to view natural gas as a critical part of these themes. Natural gas is abundant in the United States, relatively flexible, and well suited to support higher electricity demand. The U.S. Energy Information Administration (EIA) reported in March 2026 that U.S. marketed natural gas production reached a record 118.5 billion cubic feet per day in 2025.

Global LNG capacity is also expanding. The IEA expects around 300 billion cubic meters per year of new LNG export capacity to be added by 2030, led primarily by the United States and Qatar. That should improve flexibility and reliability over time, but it also underscores how much capital must still be deployed across liquefaction, shipping, storage, and downstream infrastructure.

For us, the takeaway is straightforward: higher demand for electricity does not eliminate the need for hydrocarbons. It increases the value of reliable energy sources and the infrastructure that connects them. We continue to see the energy mix as additive rather than purely substitutive, with natural gas, renewables, nuclear, and grid investment all playing a role.

The chart below shows the EIA’s forecast scenarios of U.S. natural gas production and consumption.

Bottom Line: What These Themes Mean for Portfolios

At Vigilant, we’ve been building Energy sector positions with an expectation that global natural gas and LNG demand will increase materially in the next fifteen years. Our conviction has been reinforced by the recent trend of higher demand for electricity from data centers and electrification, much of which is fueled increasingly by natural gas. But powering the increase in energy demand will also require oil and renewables. We believe that energy demand growth will require an “all hands-on deck” solution for fuel sources and generation capacity, which will be met across multiple stock sectors.

Our long-term view on energy demand growth remains intact. While the short-term may contain significant volatility in energy stocks, our multi-year view is that the providers of energy production, equipment, services and transportation are well positioned to benefit from rising fuel demand. Electrification remains likely, but demand for oil is likely to remain at current levels or higher for some time, while natural gas increases.

That supports exposure to businesses with durable cash flow and advantaged positions in fuel production, transportation, services, utilities, and related infrastructure. It also argues for selectivity. The best opportunities, in our view, are the companies helping solve real bottlenecks in sourcing, reliability, and transmission rather than those more dependent on a short-term commodity spike.

Our energy view is not built on the assumption that today’s geopolitical risk premium will persist indefinitely. Commodity prices can move sharply in either direction, and recent events may prove temporary. But the strategic need to secure supply and the structural need for more electricity infrastructure is likely to outlast the current news cycle.

Selected source notes:

• IEA, Energy and AI, April 10, 2025: global data center electricity demand of about 415 TWh in 2024, rising to roughly 945 TWh by 2030.
• IEA, Energy and AI executive summary, April 10, 2025: in the United States, data centers account for almost half of electricity demand growth through 2030.
• DOE Electricity Demand Growth Resource Hub, April 15, 2026: rising electricity demand is mainly driven by data center expansion, AI, domestic manufacturing growth, and electrification.
• DOE Smart Transmission Tools Modernize America’s Power Grid, November 14, 2025: transmission constraints remain one of the most significant barriers to meeting growing U.S. energy demand.
• EIA Today in Energy, March 13, 2026: U.S. marketed natural gas production reached a record 118.5 Bcf/d in 2025.
• IEA Gas 2025 / Global LNG Capacity Tracker, March 17, 2026: around 300-345 bcm/yr of new LNG export capacity is expected by 2030, led primarily by the United States and Qatar.