Baker Hughes Forecasts Strait of Hormuz Disruption to Last Until Second Half of 2026

HOUSTON – Energy technology company Baker Hughes announced on its April 24 earnings call that it is operating under the assumption that the Strait of Hormuz will not be fully operational until the second half of 2026, a forecast that signals a prolonged period of disruption for global energy markets and supply chains amid the ongoing U.S.-Iran conflict. The guidance from the major oilfield services provider offers one of the most concrete timelines yet for the economic fallout from the conflict, which has effectively shuttered the world’s most critical oil chokepoint. In normal times, the strait handles approximately one-fifth of the world’s oil and liquefied natural gas (LNG) traffic. The disruption has already sent energy prices soaring, with Brent crude rising 57% to $113 per barrel. For small and mid-sized U.S. businesses, this forecast is a critical warning. A protracted closure of the strait means sustained high energy costs, which directly translate into higher operating expenses, from fuel for delivery fleets to electricity for manufacturing plants. It also creates inflationary pressure on raw materials and components, as shipping and production costs rise globally. This is no longer a distant geopolitical event; it is a direct threat to margins and operational stability for companies far removed from the energy sector. C&S Finance Group LLC has seen clients grapple with these cascading effects, and our work in supply chain optimization is focused on building resilience against precisely these kinds of shocks. During the company’s first-quarter 2026 earnings call, Baker Hughes CFO Ahmed Moghal laid out the firm’s baseline scenario. “We’re assuming the conflict persists through the end of June, but with no further major disruptions, and that the Strait of Hormuz is not fully operational until we enter the second half of the year,” Moghal told investors. He added a significant caveat, noting, “This guidance does not account for any potentially significant secondary impacts such as elevated inflationary pressures or broader supply chain disruptions.” CEO Lorenzo Simonelli reinforced the cautious outlook, stating that even after a potential de-escalation, the recovery would be gradual. “The full reopening of the Strait of Hormuz is anticipated thereafter,” Simonelli said, referring to the post-June period, “followed by a measured increase in Middle East activity levels during the second half of the year.” The emphasis on a “measured” ramp-up suggests that supply chains will not snap back to normal overnight, but will instead face months of gradual and uncertain recovery. The Baker Hughes forecast aligns with a broader pessimistic consensus in the energy industry. A separate Dallas Fed survey of 116 oil and gas executives published this week found that roughly 80 percent do not expect the Strait of Hormuz to return to normal operations before August. The scale of the disruption is immense. According to an April report from Goldman Sachs, about 14.5 million barrels per day of Gulf oil production—approximately 57% of the pre-war supply—were offline. The International Energy Agency has called the situation the largest single supply disruption in history. This has had a direct impact on Baker Hughes’ own finances, with the company reporting that its revenue from the Middle East and Asia dropped by 19% to $1.15 billion. Peers have also been hit, with Halliburton and SLB both warning investors of potential earnings reductions of 6 to 9 cents per share due to regional disruptions. The fallout extends deep into the complex world of commodity trading, where the closure has triggered chaos. According to the chief financial officers of trading houses Vitol Group, Trafigura Group, and Mercuria Energy Group, the industry has issued “multiple” force majeure notices. This legal clause allows suppliers to renege on contractual commitments due to unforeseeable circumstances, leaving hundreds of millions of barrels of oil undelivered. Speaking at the Financial Times Global Commodities Summit, Mercuria CFO Guillaume Vermersch said, “We expect a lot of financial disputes and a lot of force majeure,” adding that the outcomes could significantly shape his firm’s profits this year. This level of sustained uncertainty demands a proactive financial strategy, not a reactive one. In our experience, businesses that merely absorb rising costs without adjusting their models are the first to face cash flow crises. The unmodeled secondary impacts mentioned by Baker Hughes' CFO—inflation and wider supply chain issues—are where the real danger lies. Companies must stress-test their budgets against scenarios of even higher costs and longer delays. This is a core component of the financial risk management services we provide, helping businesses build contingency plans that preserve capital and ensure continuity. To learn more about preparing your business for this prolonged instability, contact C&S Finance Group LLC at csfinancegroup.com. The crisis is also forcing a long-term strategic rethink among Gulf oil producers who have long depended on the strait. The conflict has shattered previous assumptions that the economic and military deterrents were sufficient to keep the waterway open. As a result, regional producers are now urgently exploring alternative export routes, including pipelines that bypass Hormuz, to avoid being beholden to a single, vulnerable chokepoint in the future. As the second quarter progresses, market observers will be closely watching for any developments from diplomatic channels, including talks involving U.S. and Iranian officials. However, based on the guidance from key industry players, businesses should prepare for a volatile energy market and strained supply chains to be the new normal for at least the remainder of the year.