Good morning. If you thought geopolitical risk was fading from your strategic planning picture, think again. The U.S.–Iran war escalated over the weekend, and crude prices are already reacting. Here’s what leaders need to be watching.
Energy prices are likely to surge again. Global oil demand is down, mainly because of China and other Asian countries. But U.S. consumption is up, despite pump prices that are about 50% higher than before the Iran war. Some shipping routes remain open in the Strait of Hormuz but few ships are likely to use them right now. With nearly 1 billion barrels of global petroleum reserves now depleted and Trump’s declaration that the peace deal is over, energy analysts tell my colleague Jordan Blum that prices are likely to settle closer to $90 per barrel and possibly go as high as $200.
Consumers–and voters–could be coming for you. Americans tend to conflate what they pay at the pump with broader energy prices that include electricity, natural gas and renewables. Overall energy prices impact public opinion in other ways. The energy consumption of data centers is one reason why American consumers hate AI. They’re taking a closer look at who’s profiting amid their pain. Last year, 51 electric and gas utility companies in the U.S. paid their CEOs a collective $626 million, according to an analysis published by the Energy and Policy Institute, which is a $100 million increase from 2024. Such realities could sway the policy debate in a key election year.
There are no easy answers to inflation. The U.S.-Israel attacks on Iran came at a time when business leaders were already struggling to adjust sourcing, supply chains and policies to tariffs and retaliatory trade policies. It’s another ingredient in a recipe that’s keeping prices high. The Fed isn’t happy with the trend. Companies are hiking prices, hoping customers will continue to buy. U.S. home prices have hit an all-time high, despite falling prices on the West Coast. That’s putting more pressure on CEOs to cut costs, especially in areas like labor, but AI is too expensive to replace humans in most jobs right now.
CEOs are on alert. Iran isn’t just threatening revenge on Trump; The Islamic Revolutionary Guard Corps and other Iran-linked threat actors are targeting U.S. companies, especially in tech and critical infrastructure. Leaders face the challenges of staying abreast of government warnings on the latest threats, and making sure employees are up to date on cybersecurity training. Yet they have to balance those factors without overindexing on fear about traveling to places like the Middle East as travel advisories have eased and most of the region is getting back to normal.
Contact CEO Daily via Diane Brady at diane.brady@fortune.com
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The nightmare Hormuz scenario
Nearly 1 billion barrels of worldwide petroleum reserves are now depleted and not being replenished. At the same time, mothballed refineries have yet to come back online, China still hasn’t resumed importing large oil volumes, and President Donald Trump has declared the interim peace deal “over” amid new drone and rocket exchanges. That means the Strait of Hormuz is unlikely to return to its normal volumes for many months.
The markets
S&P 500 futures are down 0.31% this morning. The last session closed up 0.42%. The STOXX Europe 600 was down 0.15% in early trading. The U.K.’s FTSE 100 was flat in early trading. Japan’s Nikkei 225 was down 1.92%. South Korea’s KOSPI was down 8.95%. China’s CSI 300 was down 1.79%. Hong Kong’s Hang Seng was up 0.16%. India’s NIFTY 50 was down 0.02%. Bitcoin was at $63K.
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CEO Daily is curated and edited by Joseph Abrams, Jason Ma, Claire Zillman, and Lee Clifford.
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