Economy meets Trump deadline in Strait of Hormuz: 2 weeks

and crude oil price At levels not seen in years, the virtual closure of the Strait of Hormuz has halted global business supply chains across sectors of the economy, testing executives’ confidence that the worst is yet to come. on friday, united airlines CEO Scott Kirby said oil prices are $175 and the company plans to keep oil prices above $100 until 2027. The airline CEO added that while this prediction may not come true, there is good reason to start planning as at least a potential reality.

In recent years, business leaders have become accustomed to a world of new forms of uncertainty. But many markets and executives are concerned about the potential impact of the U.S.-Iranian war, which President Donald Trump continues to point to with an uncertain end date. The Nasdaq entered a correction on Friday, bringing the stock market into negative territory for the fourth consecutive week, but not only risk-on assets but also safe-haven assets such as gold and bonds are falling.

The government and military are responding. By Thursday, the Chairman of the Joint Chiefs of Staff announced that the military was “hunting and killing” vessels used by Iran to disrupt traffic in the Strait. Trump’s threats over the Strait of Hormuz have intensified, with the president saying on Saturday that Iran had 48 hours to reopen the strait or the United States would shut down its domestic power plants. Meanwhile, more U.S. allies have signaled their intention to support efforts to ensure the safe passage of ships, although no concrete plans have been implemented. President Trump also said Friday that the Strait of Hormuz “needs to be guarded and guarded as necessary by other countries that use the Strait of Hormuz, but not the United States!”

For now, executives have their own views on the issue. The Trump administration and its allies in the effort to reopen the Strait of Hormuz will have about two weeks left. Alternatively, executives must expect the conflict to drag on until at least mid-year, with all the attendant fallout for the global economy. That was the conclusion of a conference call between members of the CNBC CFO Council earlier this week with John Kilduff of Again Capital, an expert on energy and commodity markets. Mr. Kilduff also joined the CFO to share his views on the outlook for oil prices from within the trader and investor community.

One sector that is truly at war is energy, and on a conference call Tuesday morning, Energy’s chief financial officer (CFOs are granted anonymity on conference calls to freely discuss internal discussions) said the company is planning future scenarios for three different possibilities. That means reopening the Strait of Hormuz by the end of March, reopening it near the end of the year, or in a worst-case scenario, closing it until the end of the year. But Energy’s chief financial officer acknowledged that it’s difficult to tell exactly which scenario is more likely at this point, saying executives have no choice but to “worry about what’s the worst that could happen here.”

These concerns about the passage of time were echoed by CFOs who participated in the call from outside the energy sector. A tech chief financial officer on the call said not having to worry about oil prices doesn’t mean the company isn’t worried about the indirect effects, which for global companies means pressures around the world, especially in the Middle East and in booming countries like Saudi Arabia, Dubai and other United Arab Emirates (UAE). The tech CFO said his business is focused on enterprise sales, but said, “Consumer demand ultimately influences business demand, which directly impacts our business.”

“How long will this last?” he asked.

Kilduff said the scenario being mapped out within energy company boards is also consistent with what traders in the market are grappling with. “The March (end of the month) restart you’re talking about is about two weeks from now, and that’s what I’ve been talking about,” he told energy chief financial officers. “This is a big window we’re living through right now, in part because military officials are saying they’re turning their attention to the Strait now,” Kilduff said. “We don’t know where it’s going to go, but if we see this lingering until mid-year, then definitely after April 1st it’s time to enter the next phase of re-pricing. In my opinion, WTI prices are well above $100 and we start to worry about shortages, especially in Asia.”

Measures to strengthen and save oil supplies are not enough

The announcement of strategic oil reserves from Japan to the United States and the United States’ ability to release more than 1 million barrels per day (which may have been in question just a few years ago) will help quell the supply scare that most recently occurred in the aftermath of the Russia-Ukraine war. But Kilduff said “the numbers are too high” for this solution to be effective in the long term. “This is a deficit of 10 million to 12 million barrels a day. … It’s really insurmountable. There are no policy measures that can be taken. There are no levers that can be pulled to offset this,” he said.

That’s why he believes the time to pay attention is after April 1st. “When you don’t have a solution, you don’t have a plan, you don’t have any semblance of hope that you can build up forces or do whatever the military has to do to reopen the Straits, that’s when you have an energy crisis,” Kilduff said. “By the middle of this year, we’re going to see shortages in countries like India, Japan and South Korea. We’re going to see a curtailment of industrial production. We’re going to literally have to save money to keep the lights on,” he said. If the military and government do not provide a suitable answer by April 1, it will mean that “a crisis is approaching.”

Kilduff said the good news is that there is now less reason to worry about the United States.

There is already competition in the diesel market, with diesel prices trending up even more sharply than crude oil or gasoline, but the market remains relatively well-supplied in the short term. But by the end of the year, Kilduff said, the U.S. will also have a “massive energy crisis. …The energy shortage will definitely be in California by then.”

He pointed out that policy measures such as tax-free holidays, which have been discussed to keep prices down, are in some ways almost perverse, as they seek to prop up demand. “In a situation like this, you want to do demand destruction to stabilize prices or even bring prices down because this is very problematic for consumers,” he said.

He said it was impossible to divert the roughly 20 million barrels a day that would normally flow through the Strait of Hormuz to infrastructure such as the Saudi East-West pipeline, and that the oil market was not responding well enough. “None of these policy measures that we’ve been talking about are really going to address this situation,” Kilduff said, even with a total of up to 2 million barrels per day and 1 million to 1.5 million barrels per day that can be transferred through pipelines to ships.

In Kilduff’s view, WTI had a cap of around $100 for one reason. brent crude oil The increase has been “pretty well behaved” in the range of $105 to $110. “That’s because this situation could clear up pretty quickly. … We’re just waiting on a cliff to see if we get another notch here, because if this continues much longer than two weeks or so, it’s going to reprice a barrel of oil here pretty high,” he said.

Mr. Kilduff told the CFO that there is some truth to the argument that high oil prices have not hurt the U.S. economy as much as oil did in the 1970s because our country’s production situation is strong and the economy is consuming less energy. The US position is supported by the fact that the majority of imported oil comes from Canada, and the US now has newly “rediscovered” resources from Venezuela, which, in contrast to US shale oil, are suitable for the operations of Gulf Coast refiners. “Without the U.S. manufacturing base, prices on the world market would be much, much higher. There’s no choice here,” Kilduff said.

There are also many floating storage facilities and other oil storage facilities remaining around the world. Indeed, an oil glut that had begun to emerge at the start of 2026 is still being cleared, and this could be in good sync with a military approach in that it does not prioritize the Straits. But Kilduff added: “I think this also misses the mark on what the inflation pulse is going to be across the supply chain and how that impacts consumer confidence.”

$100 WTI oil price ‘floor’ could be set soon

Even if the Strait of Hormuz situation is resolved, the market has every expectation that the risk premium will remain elevated in oil prices as other Middle Eastern countries halt production, facilities across the region are damaged, and it will take time for production to return to previous levels. The more damage done to oil and gas operations, the longer that timeline will be extended. The Iranian attack that took out 17% of Qatar’s liquefied natural gas export capacity could take three to five years to fully repair, Qatar Energy’s CEO told Reuters on Thursday.

If the U.S. or Israel attacks more Iranian oil export facilities, “we would expect them to use what’s left to asymmetrically attack oil production facilities in all of the surrounding countries,” Kilduff said. “The UAE is in some ways the closest and easiest country to attack. That’s why they’re doing it.”

“That was one of the unknowns. What will Iran do in response? Will it go after its neighbors? Will they have what I call ‘drowning syndrome,’ where you go to rescue someone and they take you with them? That seems to be the case for the Iranians. In fact, they are trying to take everyone along,” Kilduff said. “It’s clear that the Iranians are trying to spread pain, and it turns out they’re pretty good at it,” he added. “Once we hear of successful Iranian attacks on critical infrastructure in Saudi Arabia, Kuwait and Iraq, this price quickly jumps by $20 a barrel. It’s a ‘buy now, ask later’ mode for market traders.”

Even if the situation were to escalate, “it would be a very careful, gradual process,” Kilduff said. “The fundamentals and risk environment may still be very strong, so it will be more difficult to get back to $70 or $60,” he said.

But the next two weeks are the first. “We are on the brink of $100 becoming a new floor in the next week or two. Unless there is meaningful progress in securing the Strait, the benefit of the doubt will be lost on this market,” Kilduff said. “The loss of supply will start to have an impact and start to take its toll,” he added.

With the recent focus on tensions between President Trump and the military, Kilduff said, “This is going to be a test for the market. Can we get out of this in the next two weeks? We’re holding our breath.” “Choose your analogy, your analogy. Are we like those people in a disaster movie, staring at the big wave crashing over us, just like before it all ends badly?”