The FTSE 100 is proving to be a marvellous fishing pond of growth opportunities. Even after taking a tumble in light of the escalating conflict in the Middle East, the UK’s flagship index is up close to 6% since the start of 2026.
Yet this could be just the beginning.
The latest projections from The Economy Forecast Agency (EFA) suggest the large-cap index could climb to 13,252 points by the end of December 2026. That’s 26.4% ahead of where the FTSE 100 stands today, signalling another year of potentially extraordinary growth.
So, how can investors capitalise on this incoming momentum?
Inspecting the forecast
Despite the initial sell-off in the stock market, the tragic war in Iran could create a powerful tailwind for many FTSE 100 stocks.
With near-fixed production costs, surging oil & gas prices open the door to significant margin expansion for the energy sector, including renewables as well as fossil fuels.
These dynamics invite ugly inflation back into global economies.
While that’s bad for consumers, higher inflation indirectly lifts commodity prices, supporting the earnings of mining stocks. And depending on the severity of currency devaluation, central banks like the Bank of England may be forced to pause or even reverse recent interest rate cuts, enabling the banking and insurance sectors also to enjoy wider profit margins.
For the FTSE 100, that creates a potentially perfect storm.
Why? Because the energy, mining, banking, and insurance sectors represent 37% of the index. And with another 33% of the FTSE 100 concentrated in inflation-resistant sectors (like utilities and healthcare, among others), investors could be in for a volatile, but lucrative 2026.
Positioning for success
This scenario is far from guaranteed. And a de-escalation or cooling of geopolitical tensions could quickly undo the surge in oil & gas prices, resulting in the FTSE 100 to fall significantly short of the EFA’s expectations.
Nevertheless, let’s assume the worst-case scenario. There are two ways for investors to try to capitalise on the situation and protect their portfolios.
The first is just investing in a low-cost index tracker fund. The second, and potentially most lucrative, is to invest directly in the businesses that look set to benefit. And one energy giant that experts have begun eying up is Shell (LSE:SHEL).
Unique positioning
Unlike BP, which has been reducing its exposed to liquefied natural gas (LNG) in recent years, Shell has doubled down, with a globally integrated production network spanning Australia, Malaysia, Nigeria, and Trinidad.
This level of LNG exposure is structurally unmatched by its peers. And as buyers scramble to source LNG that Qatar would normally supply, the firm can simply start redirecting cargoes to premium-paying nations, organically expanding its profit margins.
Of course, this similarly introduces risk.
Once supply from the Middle East is eventually re-established, Shell’s premium LNG profits would likely disappear overnight.
What’s more, a rapid expansion of earnings due to war will likely draw the attention of the UK government, which has already demonstrated it’s not shy about introducing windfall taxes on oil & gas companies.
So, what’s the verdict?
It’s impossible to know for certain whether the EFA’s forecast will prove accurate or whether Shell will successfully outperform in the current geopolitical landscape. But with a relatively modest valuation, that could be a risk worth considering.
