A stark disconnect has emerged between energy industry insiders and financial markets over the timeline for reopening the Strait of Hormuz, with 80% of oil and gas executives now expecting the disruption to last beyond August 2026, according to a new survey from the Federal Reserve Bank of Dallas.
"There’s still a great deal of uncertainty regarding, ultimately, the duration and depth of the conflict," Baker Hughes CEO Lorenzo Simonelli said on the company's recent earnings call, adding that geopolitical risk is now an enduring feature of oil and gas markets.
The Dallas Fed survey highlights a significant perception gap. While prediction market Polymarket shows a 54% implied probability of the strait reopening by the end of June, the survey of nearly 100 energy executives paints a much bleaker picture. Only 20% see a resolution by May, while 39% point to August, 26% to November, and 14% believe it will take even longer. This suggests that nearly 40% of industry leaders see the disruption extending beyond 2026.
The implications of this prolonged closure are significant. The shutdown has already removed about 10% of global oil supply and disrupted roughly 20% of global LNG output. Executives are bracing for lasting changes, with 79% of those surveyed expecting a permanent increase in Persian Gulf shipping costs of at least $2 per barrel. A significant 43% of that group anticipates costs rising by $4 or more per barrel. This suggests that even if the strait reopens, the risk premium associated with the region is here to stay.
Market hopes that U.S. shale production could offset the supply shortfall are also being dashed. The Dallas Fed survey found that 90% of executives do not expect U.S. oil production to increase by more than 500,000 barrels per day in 2026, a sentiment that remains unchanged for 2027. This limited supply-side flexibility means that any prolonged disruption in the Strait of Hormuz will likely lead to a sustained period of higher energy prices and increased market volatility.
The survey also revealed a deep-seated concern about the future stability of the region. A full 48% of executives believe it is "highly likely" that a similar geopolitical event will disrupt the Strait of Hormuz again within the next five years. This indicates a structural shift in how the industry views geopolitical risk, with a clear consensus that the era of cheap and secure energy transport through the Persian Gulf may be over. For investors, this suggests that the current market pricing may be systematically underestimating the long-term risks, and a re-evaluation of energy-related assets may be necessary.
This article is for informational purposes only and does not constitute investment advice.
