Written and reviewed by Kevin Nerway · Last verified 25 April 2026
Key Takeaways
- The closure of the Strait of Hormuz has halted 20% of global oil shipments and 9 million barrels per day of production.
- SLB and Baker Hughes reported Q1 Middle East revenue declines of 10% and 19%, respectively, due to regional instability.
- Industry leaders expect a structural shift toward North American LNG and offshore projects to ensure global energy security.
- Qatar has declared force majeure on gas exports, further tightening international energy supplies.
Geopolitical Conflict Halts Critical Transit via Strait of Hormuz
The escalation of the U.S.-Israeli war with Iran has triggered a massive disruption in the global energy supply chain. According to reports from market reporting, the closure of the Strait of Hormuz-the world's most vital oil artery-has effectively removed 20% of global oil supply from the market. This blockade, combined with the loss of 9 million barrels per day in production, has forced Asian and European nations into a volatile scramble for alternative energy sources.
For prop traders, this level of supply destruction typically leads to heightened volatility across energy markets. Monitoring bank-level positioning data is essential during such black swan events, as institutional players rebalance portfolios to account for the sudden loss of regional liquidity. The disruption has not only impacted physical crude but has also led to a declaration of force majeure by Qatar regarding its gas exports, adding further pressure to the global energy complex.
SLB and Baker Hughes Report Sharp Revenue Contractions
The financial impact on the oilfield services sector has been immediate. SLB (formerly Schlumberger) reported that its Middle East and Asia revenue fell 10% in the first quarter to $2.69 billion. The company cited security concerns in Iraq and disruptions to offshore operations as primary headwinds. Baker Hughes, another industry giant, saw an even steeper decline, with regional revenue dropping 19% to $1.15 billion.
These figures highlight the risks inherent in regional concentration. Traders evaluating challenge requirements during geopolitics events should note that the Middle East accounts for over a third of the quarterly revenue for these firms. SLB has already warned that the conflict will likely impact second-quarter earnings by 6 to 8 cents per share, suggesting that the financial ripple effects of the war are far from over.
Market Impact Snapshot
| Asset | Direction | Confidence |
|---|---|---|
| Crude Oil | Bullish | High |
| Natural Gas | Bullish | High |
| Energy Sector Equities | Mixed/Volatile | Medium |
| USD/CHF (Safe Haven) | Bullish | Medium |
Shift Toward North American Upstream Investment
In response to the regional instability, energy giants are signaling a major strategic pivot. Baker Hughes CEO Lorenzo Simonelli noted an "acceleration of investment decisions" for North American liquefied natural gas (LNG) projects. The focus is shifting toward energy security and supply diversity, moving away from reliance on the volatile Middle East corridor.
SLB CEO Olivier Le Peuch echoed this sentiment, suggesting that as the conflict continues, investment will likely flow into deepwater offshore markets in Latin America and North American upstream projects. This shift could create long-term trends in energy-related assets. Traders can use prop trading calculators to manage risk as they transition from short-term volatility plays to longer-term fundamental positions based on these infrastructure shifts.
Post-War Outlook and Energy Security Priorities
While the current environment is defined by disruption, industry leaders are already looking toward a post-conflict landscape. SLB expects oil prices to trade at higher levels after the war than before it, driven by the structural need to expand global production capacity. Analysts anticipate that post-war repairs and the rebuilding of energy infrastructure will eventually boost sector growth.
For those looking to capitalize on these shifts, it is vital to find the right prop firm that allows for the holding of positions during high-impact news. The transition from Middle Eastern production to Western hemisphere exploration represents a fundamental change in the global oil map. Success in this environment requires a deep understanding of how traders perform in volatile conditions and the ability to adapt to rapid changes in supply-side fundamentals.
Frequently Asked Questions
How has the Iran war affected global oil supply
The conflict has shut down the Strait of Hormuz, which handles 20% of the world's oil. Additionally, 9 million barrels per day of production have been shut in, causing a supply scramble in Asia and Europe.
Why did SLB and Baker Hughes see a revenue drop
Both companies saw revenue declines between 10% and 19% in the Middle East due to security concerns, production constraints in Iraq, and Qatar declaring force majeure on gas exports. The Middle East represents over one-third of their total revenue.
Where is oil investment moving next
Industry CEOs indicate a shift toward North American LNG projects and offshore exploration in Latin America. This movement is driven by a global need for energy security and supply diversification away from conflict zones.
What are the long-term oil price expectations after the conflict
SLB CEO Olivier Le Peuch stated that he expects oil prices to trade at higher levels after the war than they did before the conflict began. This is attributed to the need for increased upstream investment to meet rising global demand.