Baker Hughes Warns Strait of Hormuz Won't Fully Reopen Until Late 2026

Baker Hughes, a leading oilfield services company, has projected that the Strait of Hormuz may remain closed until the second half of 2026 due to the ongoing conflict between the U.S. and Iran. The company’s financial guidance assumes the strait will not be fully operational before then, reflecting deep uncertainty about the conflict’s duration.

This prolonged closure threatens global energy supplies, as the strait is a vital passage for about 20% of the world’s oil and 20% of liquefied natural gas (LNG). Industry experts and surveys echo this outlook, signaling persistent risks and price premiums in oil and LNG markets.

Baker Hughes’ Cautious Outlook on Strait of Hormuz Reopening

During its first-quarter earnings call, Baker Hughes CFO Ahmed Moghal stated the company’s financial planning is based on the assumption that the U.S.-Iran conflict will continue through June, with the strait reopening only in the latter half of 2026. Moghal emphasized the significant uncertainty surrounding the conflict’s length and intensity.

Baker Hughes, with extensive operations in the Middle East, is a key player in the global oilfield services sector. Its cautious stance reflects a broader industry consensus about the strait’s prolonged closure.

Industry Consensus and Survey Insights

A recent Federal Reserve Bank of Dallas survey of nearly 100 oil and gas executives found that almost 80% expect the Strait of Hormuz to remain closed until August or later. Additionally, over 80% of respondents anticipate future disruptions in the strait to be somewhat or very likely.

These findings underscore the widespread concern within the energy sector about ongoing instability and its impact on global supply chains.

Geopolitical Risks Driving Persistent Price Premiums

Baker Hughes CEO Lorenzo Simonelli highlighted that geopolitical risk has become a structural factor in oil and gas markets following the Iran conflict. The strait’s closure has disrupted approximately 10% of global oil shipments and 20% of LNG supplies.

"This situation will likely result in persistent risk premiums for oil and LNG prices," said Simonelli.—Lorenzo Simonelli, CEO of Baker Hughes

The strait’s strategic importance as a major energy trade route means its closure has triggered the largest oil supply disruption in history, with tanker traffic remaining minimal as the conflict enters its eighth week.

Current Conflict and Its Impact on Maritime Traffic

Iran has effectively blocked exports through the Strait of Hormuz by attacking tankers, while both the U.S. and Iran have seized commercial ships enforcing competing blockades amid a fragile ceasefire. This has kept tanker traffic at historically low levels, exacerbating supply chain challenges.

The ongoing tensions and enforcement actions around the strait continue to create uncertainty for global energy markets and shipping operations.

Looking Ahead: Uncertain Timeline and Market Implications

With no clear resolution in sight, the energy industry braces for extended disruptions. The prolonged closure of the Strait of Hormuz is expected to keep oil and LNG prices elevated due to sustained risk premiums.

Market participants and policymakers will be closely monitoring developments, as the reopening timeline remains uncertain and the global energy supply chain faces ongoing challenges.