Shell, Booking.com warn of impact over prolonged Strait of Hormuz blockade

Wael Sawan, chief executive of Shell, has told Bloomberg TV that disruptions in oil and LNG supply linked to the blockade of the Strait of Hormuz are expected to continue for several months and may extend into next year. Booking Holdings, the parent company of Booking.com, has also revised its annual forecast downward due to weakening travel demand linked to the war in the Middle East.

Sawan’s remarks underline the severity of the global energy shock that followed the war between U.S. President Donald Trump and Iran, which began in late February. Due to the closure of the Strait of Hormuz, about one-fifth of global oil and gas cannot be transported through the Persian Gulf.

Oil-producing countries such as Iraq, Kuwait, and Qatar have therefore been forced to halt production. Their customers, particularly in Asia, now have to source oil elsewhere and compete with other countries, driving up prices.

“We’re looking at around 900 million barrels that haven’t been produced in recent months, which have largely been compensated for by reducing stockpiles,” said Sawan. “Those inventories are now reaching relatively low levels. In some regions, demand is falling, and we are seeing a shift toward alternative fuels. This is a major development, and it doesn’t just affect oil; it also has clear implications for LNG.”

Shell said this week it is taking over Canadian shale producer ARC Resources in a deal worth 13.6 billion dollars. The purchase is intended to strengthen the company’s production growth toward 2030 and secure additional feedstock for the LNG Canada export terminal, which ships natural gas to Asian markets.

Although the acquisition reduces dependency on the Middle East, it was not a decisive factor in the deal. According to Sawan, Shell had already had ARC Resources in its sights for two years before the war with Iran began.

Booking Holdings' Chief financial officer Ewout Steenbergen said the conflict has already resulted in higher cancellation rates and a drop in new bookings during the first quarter, with further pressure anticipated in the second quarter.

Booking continues to project revenue growth of 4 to 6 percent through the end of June, although this falls short of analyst forecasts. The company has also scaled back its outlook for annual booking growth. Where it previously expected increases of over 10 percent, it is now less confident about achieving that level.

Booking says its earnings per share will also be affected. On an adjusted basis, it still expects growth of over 10 percent, but it had previously projected a rise of roughly 15 percent.

In these forecasts, the company assumes that the direct and indirect effects of the war in the Middle East will continue until the end of June. Steenbergen added that if the conflict lasts longer, it could further dampen consumers’ willingness to travel.

Booking Holdings reported 338 million accommodation nights booked through its platform in the first quarter, a 6 percent year-on-year increase. The company noted that, absent the conflict involving Iran, growth could have reached 8 percent.

Revenue at Booking, which also includes restaurant platform OpenTable and booking site Priceline, rose by 16 percent in the past period to 5.5 billion dollars. Net profit came in at 1.1 billion dollars, more than three times as much as in the same period last year.