TotalEnergies CEO: Growth in LNG demand will come from Asia
TotalEnergies CEO Patrick Pouyanné joins CNBC's JP Ong at the Energy Asia conference to discuss the impact of the Israel-Iran conflict on energy markets and the company's Asia strategy.
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Business Insider
32 minutes ago
- Business Insider
RTX Stock Looks to Prosper as Middle Eastern Conflict Escalates
Amid rising tensions between Israel and Iran, the need for cutting-edge defense capabilities is more urgent than ever. RTX Corporation (RTX) plays a crucial role in this space, supporting systems such as Israel's Iron Dome and other defense initiatives. While not a high-growth stock, RTX offers a resilient investment amid macroeconomic uncertainty, with a forward dividend yield of 1.87% providing an additional layer of return stability for investors. Confident Investing Starts Here: With year-to-date performance already outshining the S&P, recent news of a new theatre of war in the Middle East adds a layer of security for risk-averse investors. RTX Bolsters Israel amid Iran's Nuclear Missile Threat The ongoing Israel-Iran conflict underscores the heightened geopolitical risks in the region, with Iran's nuclear ambitions posing a significant threat to Western alliances, especially Israel. In this context, RTX's role in supporting Israeli defense infrastructure is both strategically vital and commercially significant. While the situation remains deeply troubling, sustained investment in defense appears essential for global stability, and RTX is well-positioned to benefit from these structural tailwinds. RTX co-develops and co-produces Israel's Iron Dome with Rafael Advanced Defense Systems and is a key contractor for the David's Sling interceptor and Patriot missile systems used by U.S. allies in the Gulf. These programs are backed by $500 million annually under the U.S.-Israel Memorandum of Understanding, further solidifying RTX's role in regional defense. Missile defense is a core contributor to RTX's nearly $100 billion backlog. The segment's operating margins—around 10%—reflect efficiencies from scale and U.S. government co-funding, which helps reduce R&D costs. In today's volatile geopolitical environment, RTX offers investors portfolio resilience. Just as the company helps protect Western nations from external threats, its stock serves as a defensive asset in times of global uncertainty. AI Could Disrupt RTX's Established Defense Moat RTX is currently competing with Lockheed Martin (LMT) and Northrop Grumman (NOC) for a major hypersonic missile interceptor contract—a bid that, if lost, could result in hundreds of millions of dollars in potential revenue loss for the company. At the same time, a new wave of defense startups, particularly from Silicon Valley, is emerging with AI-native, autonomous technologies. While RTX is actively integrating AI across its product portfolio, the rise of AI-first firms—such as Anduril—poses a long-term threat to its market share. That said, RTX is likely to remain a dominant force in the evolving defense landscape. Its long-standing relationships with key defense customers, such as the U.S. Department of Defense, Israel, and Gulf states, give it a strategic edge. Rather than being displaced by newer players, it's more probable that emerging AI defense startups will seek partnerships with established firms like RTX. In the tightly interconnected Western defense ecosystem, deeply embedded contractors with decades of trust and proven capabilities—such as RTX—are positioned to endure and adapt. RTX Stock Offers Moderate but Resilient Upside Based on my current valuation model, I project RTX to deliver normalized earnings per share of approximately $6.50 by mid-2026. Assuming only a modest contraction in the trailing 12-month price-to-earnings ratio—from 25 to 24, reflecting elevated investor sentiment amid ongoing geopolitical tensions—this supports a 12-month price target of around $155. With shares currently trading near $145, that implies a potential price appreciation of about 7%. When factoring in RTX's dividend yield of roughly 1.5% to 2%, the total expected return over the next year is approximately 9%. This outlook reinforces my view of RTX as a defensive, income-generating holding rather than a high-alpha opportunity. The company has increased its dividend for 32 consecutive years, with a five-year dividend growth rate of 6.65% —a testament to its consistency and financial strength. However, given that my portfolio is oriented toward high volatility and alpha generation, RTX, while fundamentally sound, does not align with my current investment strategy. Is RTX a Good Stock to Buy? Wall Street currently rates RTX as a Moderate Buy, with 12 Buy ratings, five Holds, and no Sells. The average price target stands at $140.33, suggesting a potential downside of about 4% over the next 12 months. My independent valuation is more aligned with the higher end of analyst estimates. While geopolitical tensions may boost short-term sentiment, the consensus underscores the importance of focusing on long-term fundamentals rather than chasing near-term headlines. RTX is a Prime Defense Investment There are valid reasons to approach an allocation to RTX with caution. Chief among them is the potential for AI-driven disruption to erode future returns. Additionally, RTX offers only moderate annual return potential, although it provides meaningful stability and resilience across various macroeconomic environments. While I'm moderately bullish on the stock, I choose not to hold a position personally, as RTX functions more as a portfolio hedge than a high-growth, alpha-generating asset. I currently maintain that defensive positioning can be achieved through a cash allocation instead.
Yahoo
38 minutes ago
- Yahoo
Israel-Iran crisis: How vital is the Strait of Hormuz for oil market?
The flare-up of tensions between Israel and Iran has reignited concerns over the security of the Strait of Hormuz, a vital artery for the global energy market. This narrow stretch of water, just 29 nautical miles wide at its tightest point, funnels nearly a third of the world's seaborne oil and a fifth of global LNG. The U.S. Energy Information Administration (EIA) calls it the "world's most important oil chokepoint," underlining the strategic importance of the passage that links the Persian Gulf with the Gulf of Oman and the Arabian Sea. Investors and analysts are weighing the implications of a potential disruption in this narrow but critical waterway. What happens if the Strait of Hormuz is suddenly sealed off? Following Israeli attacks on Iran, Iranian officials have raised the spectre of closing the Strait—triggering a sharp surge in crude prices. According to the International Energy Agency (IEA), around 20 million barrels per day (mb/d) of crude oil and refined products passed through the Strait of Hormuz in 2023, representing nearly 30% of total global oil trade. Most of this volume—around 70%—was bound for Asia, with China, India and Japan among the largest recipients. While alternative pipeline infrastructure exists, it is limited. The IEA estimates that only 4.2 mb/d of crude oil can be rerouted via overland routes, such as Saudi Arabia's East-West pipeline to the Red Sea and the UAE's Abu Dhabi Crude Oil Pipeline to Fujairah. This capacity represents barely one quarter of the typical daily volume transiting the Strait. 'Any prolonged crisis in the Strait of Hormuz would not only disrupt shipments from key Gulf producers—Saudi Arabia, the UAE, Kuwait, Iraq and Qatar—but also make inaccessible the majority of the world's spare production capacity, which is concentrated in the Persian Gulf,' the IEA warned in a report. Related Israel kills IRGC intelligence chief and deputy, Iranian state media says Netanyahu says Israel has not ruled out killing Iran's Ayatollah Ali Khamenei Era of nuclear disarmament 'coming to an end', SIPRI warns Iran seeks international mediation amid conflict with Israel, Trump promises peace LNG markets are even more exposed to potential disruptions. All LNG exports from Qatar—the world's second-largest LNG exporter—and the UAE must pass through the Strait. The IEA reports that 90 billion cubic metres (bcm) of LNG transited the Strait in the first ten months of 2023, equal to 20% of global LNG trade. With no viable alternative routes for LNG exports from Qatar or the UAE, any maritime closure would severely tighten global supply. Around 80% of these LNG volumes are destined for Asia, while Europe receives roughly 20%, meaning disruptions would exacerbate competition between regions, especially in a tight market. 'The sheer volume of oil passing through the Strait and the scarcity of alternative routes means even brief disruptions would have significant consequences for the global market,' the IEA stated. While a full closure remains a low-probability scenario, analysts agree that the threat alone is enough to inject volatility into energy markets. Crude oil prices surged by 13% last week amid escalating tensions between Israel and Iran. Although prices have since eased slightly after reports confirmed that Iranian energy infrastructure remained untouched by Israeli strikes, the risk of further escalation—and potential disruption to global energy flows—remains elevated. In response, Wall Street analysts have been quick to assess the possible fallout from any interruption of oil and gas shipments through the Persian Gulf, particularly the Strait of Hormuz. Goldman Sachs warned that an extreme risk scenario involving a prolonged closure of the Strait could push prices well above $100 per barrel. The investment bank estimates that Iran currently produces around 3.6 million barrels per day (mb/d) of crude oil and 0.8 mb/d of condensates, with total seaborne exports averaging 2.1 mb/d so far this year—most of it heading to China. T ING's head of commodities strategy, Warren Patterson, indicates that the market has begun pricing in a substantially higher geopolitical risk premium in light of recent developments. Patterson stated that any disruption to Iranian oil flows would be enough to eliminate the expected oil surplus for the fourth quarter of 2025, likely pushing Brent crude prices toward $80 per barrel. Yet, the analyst warns that a more severe scenario—such as a disruption of shipping through the Strait of Hormuz—could be far more consequential. 'Almost a third of global seaborne oil passes through this chokepoint,' he noted. 'A significant disruption to these flows could drive prices up to $120 per barrel, particularly because most of OPEC's spare capacity is located in the Persian Gulf and would be inaccessible under such conditions.' "This escalation also has ramifications for the European gas market," he added. The Strait of Hormuz is more than just a shipping lane—it's a lifeline for global energy. With no easy detours for oil or LNG flows, its vulnerability puts markets on edge every time tensions flare in this region. A full closure of the Strait may still seem a remote event, but the mere threat is enough to rattle markets and keep oil prices elevated. As Iranian and Israeli forces continue to exchange strikes, the risk of miscalculation looms large. In a region where diplomacy is fragile and stakes are high, one wrong move could turn a regional conflict into a global energy crisis. Sign in to access your portfolio
CNBC
38 minutes ago
- CNBC
$50 the "sweet spot" to keep energy investments flowing, says Petronas CEO
Muhammad Taufik, President & Group CEO of Petronas, shares the company's long-term goals and outlook for oil markets amid the conflict in the Middle East. He joins 'Squawk Box Asia' on the sidelines of the 2025 Energy Asia in Kuala Lumpur.
