War-Driven Oil Price Spike Sets Back US Energy Firms' Gulf Investments
The ongoing war between Iran and the US has led to significant disruptions in global energy supplies, causing oil prices to surge by nearly 22% since February 28. The closure of the Strait of Hormuz, a vital waterway through which one-fifth of the world's oil and natural gas is shipped, has had a major impact on energy companies operating in the region.
US-based ExxonMobil and Chevron have seen their earnings soar due to higher oil prices, with combined second-quarter profits exceeding $26.6 billion. However, this windfall comes at a cost, as prolonged disruption threatens the future growth plans of US energy firms with investments in the Gulf region.
Rahul Choudhary, vice president of Upstream Research at Rystad Energy, notes that US companies' share of gas supplies from the region is expected to fall by around 40% this year compared to last year, and oil supplies by 30-35%. The conflict has already reduced the amount of oil and gas drawn from the Gulf region by US energy firms.
The disruption has also hit several major energy facilities in the region, including Saudi Aramco's Abqaiq processing complex and ADNOC's al-Ruwais Industrial City. These attacks have not only affected operations but also highlighted the vulnerability of US-linked energy assets in the region.