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(Reuters) -Caterpillar Inc expects to report higher sales for its energy and mining business when it reports results Thursday. This is due to rising commodity prices sparked in part by the conflict in Ukraine. It could also help to boost the reputation of the large-equipment manufacturer as an inflation hedge.

Gas-intensive firms have been paying high prices for the global re-routing energy flows in light of an expanding war in Ukraine. In addition, commodity inflation has increased manufacturing input costs.

However, with the United States and Europe vowing to cut off Russian oil and gas, crude prices rose to record levels of $127.98 per barrel in March. U.S. West Texas Intermediate crude (WTI), peaked at $123.70.

“[Before the war]”There was a misperception that CAT wasn’t positioned well since mining, oil, or gas were not going be growth industries,” Stephen Volkmann from Jefferies, senior machinery analyst. We have learnt that it is important to supply basic and transition fuels.

This is the Illinois-based maker of construction and mining equipment that has seen a dramatic increase in crude materials and oil prices.

Drilling activity is increasing, and so are the spending by mining and oil companies looking to upgrade their machinery fleet. Caterpillar Refinitiv’s IBES data shows that (NYSE:) will see an increase in revenue of 12% to $13.35 trillion.

Tami Zakaria from J.P. Morgan stated that “CAT can also be seen as a net beneficiary in material cost inflation” in a J.P. Morgan note.

Caterpillar shares have historically been influenced by an inflation spike and a rise in commodity prices. This has helped to boost investor confidence in this blue-chip stock. In March, shares rose by 19%.

Caterpillar has long been viewed as an inflation hedge, said Noah Kaye, senior research analyst at Oppenheimer & Co Inc. “Their segments that typically see the highest incremental margins ()The segments where they have the largest number of mining companies houses.”

Caterpillar could still experience margin compression, just like other industrial producers.

Caterpillar introduced price hikes last year in an effort to reduce its input costs. Now, “investors are going to be looking for little margin improvement because of those pass through costs,” said analyst Brian Langenberg of research firm Langenberg & Company.