Baker Hughes has adjusted its financial outlook based on the expectation that the Strait of Hormuz may remain partially closed for several months due to ongoing U.S.-Iran tensions. CFO Ahmed Moghal indicated during the company’s first-quarter earnings call that the firm anticipates the conflict will persist through June, with full operations in the strait not expected until the latter half of the year. This sentiment is echoed by a recent Federal Reserve Bank of Dallas survey, where nearly 80% of oil and gas executives foresee the strait remaining closed until at least August.
The implications for the energy sector are significant, as the closure has already affected 10% of global oil volumes and 20% of liquefied natural gas supplies. Baker Hughes CEO Lorenzo Simonelli highlighted that geopolitical risks have become a structural component of oil and gas markets, suggesting that persistent risk premiums for oil and LNG prices are likely to continue.
Market professionals should prepare for ongoing volatility in energy prices, driven by geopolitical uncertainties and potential supply disruptions stemming from the conflict in the Strait of Hormuz.
Source: cnbc.com