The Biggest Energy Supply Shock in Decades And Why I Believe SLB Is One of the Best Ways to Play It
Over the last several years, investors became conditioned to believe that energy prices would remain relatively stable and that the world would always have enough supply to meet demand. I think that assumption is beginning to change in a very meaningful way.
Between geopolitical tensions, years of underinvestment in oil and gas infrastructure, growing global power demand, and the rise of artificial intelligence, we may be entering one of the most important energy cycles we’ve seen in decades. Most people focus only on the price of oil. I think that’s too simplistic.
The real story is that the world suddenly needs more energy security, more drilling activity, more infrastructure, and more investment across the entire energy ecosystem. At the same time, the supply side of the equation has become increasingly fragile. When you combine Middle East instability, potential disruptions around the Strait of Hormuz, rising electricity demand from AI and data centers, aging oil infrastructure globally, and underinvestment in production capacity…you create the conditions for a major supply imbalance. And historically, when supply shocks occur, the companies that often benefit the most are not always the oil producers themselves. Sometimes the better opportunity is owning the companies that help the world find, drill, and produce more energy.
That is why one of the names I continue to like is SLB. Many investors still think of SLB as simply an oil services company. I think that dramatically understates what this business has become. SLB sits at the center of global energy production. Whether it’s offshore drilling, Middle East production expansion, natural gas development, or complex international energy projects, SLB is often involved behind the scenes. What makes the story particularly interesting to me today is that the company is positioned to benefit from multiple trends at the same time: increased global drilling activity, expansion of offshore energy projects, rising LNG and natural gas investment, energy security spending from governments, and long-cycle international projects that could last years, not months
In my opinion, this is important because many investors are still focused on short-term oil price movements while potentially missing the much larger multi-year investment cycle that may be developing underneath the surface. Another reason I like SLB is because it is not dependent on one single region or one single commodity. The company operates globally and has exposure to many different parts of the energy market. To me, this creates a more durable investment thesis. I also believe many investors underestimate how difficult it is to replace energy infrastructure once shortages emerge. These projects take years. They require capital, expertise, engineering, and execution capabilities that only a small number of companies in the world truly possess; SLB is one of those companies. The other major piece of this story that I believe the market is underestimating is artificial intelligence. AI is not just a technology story. It is an energy story.
The amount of electricity required to power AI infrastructure, hyperscale data centers, cloud computing, and next-generation computing systems is enormous. As electricity demand rises, the world needs more natural gas, more power generation, and more energy infrastructure overall. That creates another layer of long-term demand support for companies tied to the global energy ecosystem. Could there be volatility along the way? Of course. Energy has always been cyclical. But I believe we are moving into an environment where energy security, energy reliability, and energy infrastructure are becoming national priorities again. And when those priorities shift, capital tends to follow.
For investors looking for a way to participate in what could become one of the most important energy investment cycles in years, I believe SLB is one of the more compelling opportunities to consider.
Have a great week!
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All information has been obtained from sources believed to be dependable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such.
The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that no such statements are guarantees of any future performance, and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
Past performance is no guarantee of future returns.
Energy, Gas, middle east, Oil, SLBBy: Adam
