Jim Cramer indicates that these 3 stock market themes may perform well if the oil crisis subsides.

CNBC’s Jim Cramer advises against overlooking the Iran conflict since climbing oil prices could soon eclipse even the best investment options.

“The conflict can’t be isolated, regardless of our actions. I’m not trying to downplay it. We can’t dodge this topic,” Cramer stated on “Mad Money” on Wednesday night. “Individuals are attempting to downplay the war’s effects or trying to look past it, hoping it will resolve soon.”

This might explain why the market didn’t drop further on Wednesday. The S&P 500 closed marginally lower amidst a session highlighted by a 5% increase in U.S. oil prices. This contrasts sharply with Monday’s rise to over $119 per barrel. However, the current West Texas Intermediate crude prices above $88 per barrel are still greater than 50% up this year.

It seems investors are banking on the release of global strategic petroleum reserves to soften the market impacts until the crisis concludes. President Donald Trump mentioned Wednesday night he plans to use the U.S. Strategic Petroleum Reserve to alleviate energy costs. Earlier that day, the International Energy Agency agreed to release 400 million barrels of oil in response to global supply disruptions.

While these actions are beneficial, they are merely temporary solutions.

“Without any sign of a resolution to the war, there’s nothing to prevent oil from eventually climbing to $120 or higher,” Cramer warned. “That would break any containment. All bullish positions would be discarded.”

A return to those levels or worse could instigate widespread selling across the market, he went on to say, remarking, “The downturn in S&P futures would be so intense that even the stocks of Exxon and Chevron would plummet too, simply because they’re included in the index.”

Nevertheless, Cramer identified several themes investors might explore if oil levels stabilize and tensions decrease around the Strait of Hormuz, a vital passage for global oil supply.

• The first theme concerns AI-driven data center infrastructure. Cramer highlighted robust results from Oracle as evidence of this trend. “We just received the strongest affirmation of the theme’s robustness when Oracle, the leader in data centers, announced an impressive set of numbers indicating its expansion is progressing better than anticipated,” he remarked.

• The second theme pertains to the ongoing scarcity of memory utilized in AI and computing systems. Cramer noted comments from Hewlett Packard Enterprise suggesting the limited supply may persist longer than investors envision.

• The third theme Cramer emphasized involves discount retailers that thrive during inflationary times as consumers opt for lower-cost options. “It matters that financially stressed families are turning to Burlington, Ross Stores, and TJX with its HomeGoods, Marshalls, and T.J. Maxx brands,” he stated.

While geopolitical volatility remains a factor, Cramer concluded these themes are “the only ones I know that can be pursued after a surge in oil devastates the stock market.”

Join now to stay updated with Jim Cramer’s every move in the markets.

Disclaimer