Hormuz Crisis Saddles Global Companies with $25 Billion Bill

Oil/Chemical Tanker "Bald Man" at the Port of Fujairah, as the US-Israel conflict with Iran limits marine traffic in the Strait of Hormuz, in Fujairah, United Arab Emirates, May 6, 2026. (Reuters)
Oil/Chemical Tanker "Bald Man" at the Port of Fujairah, as the US-Israel conflict with Iran limits marine traffic in the Strait of Hormuz, in Fujairah, United Arab Emirates, May 6, 2026. (Reuters)
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Hormuz Crisis Saddles Global Companies with $25 Billion Bill

Oil/Chemical Tanker "Bald Man" at the Port of Fujairah, as the US-Israel conflict with Iran limits marine traffic in the Strait of Hormuz, in Fujairah, United Arab Emirates, May 6, 2026. (Reuters)
Oil/Chemical Tanker "Bald Man" at the Port of Fujairah, as the US-Israel conflict with Iran limits marine traffic in the Strait of Hormuz, in Fujairah, United Arab Emirates, May 6, 2026. (Reuters)

The US-Israeli war with Iran has already cost companies around the world at least $25 billion - and the bill is climbing, according to a Reuters analysis.

A review of corporate statements since the start of the conflict by companies listed in the United States, Europe and Asia offers a sobering look at the fallout.

Businesses are grappling with soaring energy prices, fractured supply ‌chains and trade routes severed by Iran's chokehold on the Strait of Hormuz.

At least 279 companies have cited the war as a trigger for defensive actions to blunt the financial hit, including price increases and production cuts, the analysis shows.

Others have suspended dividends or buybacks, furloughed staff, added fuel surcharges, or sought emergency government assistance.

“This level of industry decline is similar to what we have observed during the global financial crisis in 2008, and even higher than during other recessionary periods,” Whirlpool CEO Marc Bitzer told analysts after it slashed its full-year forecast in half and suspended its dividend.

As growth slows, pricing power will weaken and fixed costs will become harder to absorb, analysts say, threatening profit margins ⁠in the second quarter and beyond. Sustained price hikes are likely to fuel inflation, hurting already-fragile consumer confidence.

“Consumers are holding back on replacing products and rather repairing them,” Bitzer said.

The appliance maker is not alone. Companies including Procter & Gamble, Malaysia’s Karex company and Toyota have warned of the mounting toll as the conflict enters its third month.

Iran's blockade of the Strait of Hormuz - the world's most critical energy chokepoint - has pushed oil prices above $100 a barrel, more than 50% higher than before the war.

The closure has driven up shipping costs, squeezed supplies of raw materials and cut off trade routes vital to the flow of goods. Supplies of fertilizers, helium, aluminum, polyethylene and other key inputs have been hit.

One-fifth of companies in the review, which make everything from cosmetics to tires and detergent, to cruise operators and airlines, have flagged a financial hit due to the war.

A majority were based in the UK and Europe, where energy costs were already elevated, while almost a third were from Asia, reflecting those regions' deep reliance on Middle Eastern oil and fuel products.

To put the tally into context, hundreds of companies by October last year had flagged more than $35 billion in costs from US President Donald Trump’s 2025 tariffs.

Airlines account for the biggest share of quantified war-related costs, representing nearly $15 billion, with jet fuel prices having nearly doubled.

Sounding the alarm

As the bottleneck drags on, more companies from other industries are sounding the alarm. Japan's Toyota warned of a $4.3 billion hit while P&G estimated a $1 billion ‌post-tax profit ⁠blow.

Fast-food giant McDonald's said earlier this month it expected higher long-term cost inflation from ongoing supply-chain disruptions, the kind of assessment that until recently had been confined to industrial earnings calls.

The surge in fuel prices is hurting lower-income consumer demand, CEO Chris Kempczinski said, adding that “elevated gas prices are the core issue we're seeing right now.”

Nearly 40 companies in the industrials, chemicals, and materials industries have said they would raise prices due to their exposure to Middle Eastern petrochemical supply.

Newell Brands Chief Financial Officer Mark Erceg said earlier this month that every $5 rise in per-barrel oil prices adds about $5 million in costs.

German tiremaker Continental expects a hit of at least 100 million euros ($117 million) from the second quarter due to surging oil prices making raw materials more expensive.

Continental executive Roland Welzbacher said earlier this month that it would take three to ⁠four months before affecting the company's profit-and-loss statement. “It probably hits us late in Q2, and then it will come in full-blown in the second half,” he said.

Corporate profits have been buoyant through the first quarter, part of why major indexes like the S&P 500 have managed to scale new highs even as energy costs bite and bond yields rise on inflation-led worries.

Since March 31, second-quarter net profit margin forecasts have been cut by 0.38 percentage points for S&P 500 industrials, 0.14 percentage points for consumer discretionary companies and 0.08 ⁠percentage points for consumer staples, FactSet data show.

European STOXX 600-listed companies will face margin pressure beginning in the second quarter, as it will become harder to pass through extra costs and as protection from hedging expires, Goldman Sachs analysts said.

Consumer-facing sectors including autos, telecoms, and household products are seeing negative revisions of more than 5% for the next 12 months, Gerry Fowler, UBS head of European equity strategy, said.

In Japan, analysts have halved estimates for second-quarter earnings growth to 11.8% since the end of March.

“The ⁠true earnings hit has not yet materialized in most companies' results,” said Rami Sarafa, CEO of Cordoba Advisory Partners.



HSBC Reportedly Plans Job Cuts Across UK Wealth Business in AI Push

HSBC logo is seen in this illustration taken January 7, 2026. REUTERS/Dado Ruvic
HSBC logo is seen in this illustration taken January 7, 2026. REUTERS/Dado Ruvic
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HSBC Reportedly Plans Job Cuts Across UK Wealth Business in AI Push

HSBC logo is seen in this illustration taken January 7, 2026. REUTERS/Dado Ruvic
HSBC logo is seen in this illustration taken January 7, 2026. REUTERS/Dado Ruvic

HSBC is planning sweeping job cuts across its UK wealth management business, including a sharp reduction in financial advisers and specialist staff, as part of a broader push to integrate AI, the Financial Times reported on Wednesday.

The bank plans to cut about half of management and specialist roles in the business, while reductions among financial advisers could reach around 70%, the report said, citing people familiar with the plans.

HSBC does not disclose the number of employees in its UK wealth business, ⁠though it is ⁠thought to have hundreds of relationship managers across the country, according to the FT.

The bank did not immediately respond to a Reuters request for comment outside regular business hours.

"HSBC UK is a long-established, leading UK wealth manager and premium banking provider," the bank ⁠said in a statement to Reuters. "We're continuing to evolve to deliver more digitally enabled products and journeys to support our best-in-class wealth service and meet the changing needs of our customers."

The bank is currently in a consultation period on the proposed changes, the report said, adding that affected employees are expected to leave by the end of the month.

In May, Chief Executive Georges Elhedery said at an HSBC investor day event that staff needed ⁠to ⁠embrace AI-driven change rather than resist it and that "generative AI will destroy certain jobs".

Elhedery has made AI a central part of his strategy since taking over in 2024, deploying the technology across multiple functions and businesses to simplify operations and personalize content for customers.

Banks across the globe have increased investments in AI, reshaping workforces and leading to changes in job roles. This has deepened concerns among economists that AI will upend established industries, with job losses already emerging in sectors most exposed to automation.


Norway Plans to Spend $63.6 Billion from Wealth Fund in 2027

A general view of the cityscape in Oslo, Norway November 17, 2020. NTB SCANPIX/Cornelius Poppe via REUTERS
A general view of the cityscape in Oslo, Norway November 17, 2020. NTB SCANPIX/Cornelius Poppe via REUTERS
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Norway Plans to Spend $63.6 Billion from Wealth Fund in 2027

A general view of the cityscape in Oslo, Norway November 17, 2020. NTB SCANPIX/Cornelius Poppe via REUTERS
A general view of the cityscape in Oslo, Norway November 17, 2020. NTB SCANPIX/Cornelius Poppe via REUTERS

Norway's minority Labour Party government said on Wednesday it plans to raise its spending level in 2027 from the country's $2.3 trillion sovereign wealth fund to help cover public expenses.

The government proposed withdrawing 608.4 billion Norwegian crowns ($63.61 billion) from the fund in 2027, up from a revised 583.4 billion in 2026, and must ⁠now negotiate with ⁠four centrist and left-wing parties to pass the budget.

Gross domestic product (GDP) outside the oil industry is now expected to grow by 1.1% this year, against 1.7% growth seen in ⁠May.

Growth is seen at 1.7% in 2027, an increase from 1.6% predicted previously.

"The budget proposal is estimated to have a neutral effect on the activity in the economy next year," the government said in a statement.

It saw core inflation in 2026 at 3.1%, down from 3.2% seen in May, easing to ⁠a ⁠rate of 2.8% in 2027 against 2.6% seen previously.

The structural non-oil deficit for 2027, a key measure of how much money the government will spend from the wealth fund, was expected to be 2.7% of the fund's projected value at the end of 2026, in line with the current year.


Moody’s: Spending Restraint to Strengthen Saudi Arabia’s Fiscal Recovery in 2027

Saudi capital, Riyadh (Reuters)
Saudi capital, Riyadh (Reuters)
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Moody’s: Spending Restraint to Strengthen Saudi Arabia’s Fiscal Recovery in 2027

Saudi capital, Riyadh (Reuters)
Saudi capital, Riyadh (Reuters)

Credit rating agency Moody’s said on Tuesday that the fiscal recovery planned for Saudi Arabia in 2027 supports its view that prudent fiscal management will remain a key factor in spending and borrowing decisions.

The agency also noted that reprioritizing state investments could preserve fiscal space while economic diversification continues.

Commenting on Saudi Arabia’s Pre-Budget Statement for next year, the rating agency said that prolonged trade disruptions and additional spending have limited the fiscal improvement it previously expected.

However, it said, Saudi Arabia’s move to rein in spending in 2027 reinforces its view that prudent fiscal management will remain a cornerstone of spending and borrowing decisions.

For 2027, the government projects a spending decrease to SAR 1.392 trillion ($371.2 billion), alongside a 1% rise in revenue to SAR 1.202 trillion ($320.5 billion); this would narrow the projected deficit to around SAR 191 billion ($50.7 billion), equivalent to 3.6% of GDP.

Moody’s said the government's ability to reprioritize investments linked to Saudi Vision 2030 could preserve fiscal space while economic diversification continues. Focusing resources on projects with strong returns would likely help reconcile growth objectives with spending restraint.

As for oil, the agency expected that disruptions to strategic shipping routes will persist through the end of the first half of 2027, which could affect oil production. However, it noted that higher oil prices have cushioned the impact of lower production and exports in recent months.

Saudi Arabia's real GDP is expected to contract 3.6% in 2026, largely because of a sharp decline in oil activity, even as the non-oil economy continues to expand, according to the Ministry of Finance's Pre-Budget Statement for 2027.

The Ministry estimates that oil activity will decline by around 21.8% this year, while non-oil activities are expected to grow 3.2%, helping cushion the impact of lower oil output on the wider economy.

Non-oil activity grew 1.8% in the first half of 2026, lifting its contribution to GDP to a record 57.3%, the statement said.

Moody’s review reflects a credit assessment of the Pre-Budget Statement for 2027 that places more emphasis on the government's capability to recalibrate investment and prioritize spending efficiency while explicitly preserving its overarching economic diversification goals. This, it said, would help preserve fiscal flexibility amid geopolitical strains and global market uncertainties.