Hormuz Closure Energy Markets — The world’s largest oil companies are posting their strongest earnings in years, propelled by soaring crude prices triggered by the closure of the Strait of Hormuz following the outbreak of war between the United States, Israel, and Iran — a conflict that has severed a waterway responsible for roughly one-fifth of global oil and liquefied natural gas supplies.
Shell announced first-quarter profits of $6.92 billion, up sharply from $5.58 billion in the same period last year and ahead of analyst forecasts. Norway’s Equinor delivered an even more striking result, posting $9.77 billion in quarterly profit — its highest in three years. BP‘s earnings more than doubled over the same period. The results reflect a dramatic repricing of energy markets since hostilities began, with Brent crude surging from approximately $73 a barrel before the conflict to a peak above $120, before settling at around $101 a barrel.
The gains have not come without operational pain. Shell’s oil and gas output fell 4% compared with the final quarter of last year, and its LNG production in Qatar has been offline since early March. The company’s Pearl GTL facility — one of the world’s largest gas-to-liquids plants — has sustained damage from attacks linked to the wider regional conflict. The disruptions underscore how the war has transformed the Gulf from a reliable energy corridor into an active theatre of risk.
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The commercial consequences extend well beyond the oil patch. Danish shipping giant Maersk disclosed that elevated energy prices are adding half a billion dollars in extra costs every month to its operations. One of its vessels, the US-flagged Alliance Fairfax, had been stranded in the Gulf since late February before finally transiting the Strait of Hormuz on Monday under escort from US military assets — a rare passage that illustrated both the dangers of the waterway and the lengths required to navigate them.
In a sign of strategic repositioning, Shell simultaneously announced a $16.4 billion acquisition of Canadian shale producer ARC Resources, a move that would significantly expand its North American footprint at a moment when Gulf supply chains remain deeply uncertain. The deal signals that major producers are actively diversifying away from conflict-exposed regions even as they profit from the price spike those conflicts have generated.
In the United Kingdom, the earnings bonanza is landing against a backdrop of mounting household energy costs. The typical annual dual-fuel bill for British households currently stands at £1,641, with the energy price cap expected to rise by a further £200 when it is revised in July. The Energy Profits Levy — a windfall tax introduced in 2022 and extended by the Labour government to March 2030 — applies to UK North Sea operations, though Shell has noted that Britain accounts for less than 5% of its global production, limiting the levy’s impact on overall earnings.
Hormuz Closure Energy Markets: The Energy Security Dimension
The geopolitical backdrop remains volatile. Tehran is reported to be considering a new proposal aimed at ending the conflict with the United States, though no formal negotiations have been confirmed and fighting continues to disrupt regional infrastructure. The closure of the Strait of Hormuz, if prolonged, threatens to structurally alter global energy trade routes that have been stable for decades.
For energy companies, the current environment presents a paradox: record revenues coexist with damaged assets, stranded vessels, and supply chains under sustained pressure. Whether the windfall persists depends heavily on the trajectory of a conflict whose resolution remains deeply uncertain — and on whether the world’s most critical oil chokepoint can be reopened before the economic damage spreads further.
