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Baker Hughes: Strait of Hormuz Unlikely to Fully Open Until 2026

Baker Hughes has forecast that the Strait of Hormuz will not achieve full operational capacity until the second half of 2026, citing potential extensions of the U.S.-Iran conflict. This assessment is supported by a survey from the Federal Reserve Bank of Dallas, where nearly 80% of oil and gas executives anticipate disruptions lasting until August or beyond. CEO Lorenzo Simonelli highlighted that geopolitical risk is now a structural feature of the market. He noted that current disruptions have already impacted 10% of global oil volumes and 20% of LNG supplies, suggesting sustained price premiums.

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Baker Hughes: Strait of Hormuz Unlikely to Fully Open Until 2026

Baker Hughes predicts that the Strait of Hormuz will not return to full operational capacity until the second half of 2026, citing ongoing geopolitical tensions. The company's assessment aligns with broader industry concerns regarding sustained regional instability.

Baker Hughes' Forecast on Strait Operations

During its first-quarter earnings call, Baker Hughes CFO Ahmed Mogal stated that the firm anticipates the U.S.-Iran conflict could persist until the end of June. Consequently, Mogal advised investors that the strait is unlikely to be fully operational until the latter half of the year.

Baker Hughes is a major global oilfield services provider with significant operations across the Middle East, making its outlook highly influential within the energy sector.

Industry Consensus on Strait Disruptions

The concerns raised by Baker Hughes are echoed by independent industry surveys. A recent survey conducted by the Federal Reserve Bank of Dallas, which polled nearly 100 oil and gas executives, revealed a strong consensus:

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  • Market Expectation: Nearly 80% of surveyed executives believe the strait will not reopen until August or later.
  • Risk Perception: Over 80% of respondents indicated that future disruptions in the strait are viewed as somewhat or very likely.

Geopolitical Risk as a Structural Reality

Baker Hughes CEO Lorenzo Simonelli emphasized that geopolitical risk has transitioned into a "structural reality" for the oil and gas markets following the tensions involving Iran.

Simonelli quantified the potential impact of a prolonged closure, noting that the disruption has already affected:

  • Global Oil Volumes: 10% of global oil production.
  • LNG Supply: 20% of global Liquefied Natural Gas (LNG) supplies.

He concluded that these ongoing risks are likely to result in "persistent risk premiums for oil and LNG prices."

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