The CFO of the energy company Baker Hughes has reportedly said that the company is operating under the assumption that the Strait of Hormuz may not fully reopen for months as tensions between the U.S. and Iran continue.
Ahmed Moghal, the chief financial officer of the Houston-based oilfield services giant, told investors on the company's first-quarter earnings call that they will assume that the conflict will continue through the end of June and that the strait may not be fully operational until the second half of 2026, CNBC noted.
"There's still a great deal of uncertainty regarding, ultimately, the duration and depth of the conflict," Moghal reportedly said. His warning comes as the company and rival SLB said they expect higher spending on oil exploration and production because tighter supplies have renewed concerns over energy security.
Baker Hughes CEO Lorenzo Simonelli said the closure has affected 10% of global oil volumes and knocked offline 20% of global liquefied natural gas supplies. Simonelli said the war has changed the way energy markets must price risk."Geopolitical risk has become a structural reality for oil and gas markets," he said, according to CNBC. He added that the disruption will likely create "persistent risk premiums for oil and LNG prices."
The U.S.-Israeli war with Iran has halted oil flows through the now-closed Strait of Hormuz and shut in about 9 million barrels per day of production. Simonelli also said there is "a growing need for increased upstream investment to expand global production capacity and ensure we can meet rising demand," adding that he sees possible acceleration in North American liquefied natural gas projects.
Baker Hughes' revenue in the Middle East and Asia fell 19% to $1.15 billion in the first quarter, while SLB's revenue in the region dropped 10%. Halliburton also reported a 12.7% decline in Middle East revenue. The company also reported adjusted profit of 58 cents per share, above analyst expectations of 49 cents, and revenue of $6.59 billion, also above forecasts. Its Industrial and Energy Technology division posted record orders of $4.9 billion, helped by demand tied to LNG, gas infrastructure, grid equipment, and data centers.
Goldman Sachs said Gulf oil production could mostly recover within months once the Strait of Hormuz fully reopens, but warned that the timeline could stretch if logistical problems and damage from prolonged well shut-ins persist. The bank estimated that about 14.5 million barrels per day of Gulf crude output, roughly 57% of pre-war supply, was offline in April. The bank also cautioned that empty tanker capacity in the Gulf has dropped by about 130 million barrels, or 50%, limiting how quickly producers can move crude once exports resume.
