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Chief financial officers are in scenario-planning mode as they confront an energy-market shock stemming from President Trump’s war in Iran.
U.S. oil prices fell Monday following a stunning 31% price surge on Sunday, to over $100 per barrel, due to the effective closure of the Strait of Hormuz. Prices could reach as high as $150 per barrel in the event of a lengthy closure, analysts say. In addition to oil, the region also plays a vital role in other commodities markets, such as fertilizer, sulfur and aluminum, which are also seeing a supply squeeze.
During a retail-sector investor conference Monday, executives faced questions about how higher oil prices and the fallout from the war could affect their businesses. I was struck by comments from three finance chiefs. Here’s what they had to say:
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Levi Strauss CFO Harmit Singh
The apparel company is looking at scenarios for potential logistics disruptions, and is watching the impact of higher oil prices on consumers, according to Singh. The company has largely locked in product costs for the year, he said.
Singh said he went back to look at the impact of the oil-price spike after Russia invaded Ukraine. “It had a minor impact on our business,” he said.
Clorox could see higher energy-driven costs, and is monitoring any effects on its logistics network, Bellet said. The Middle East accounts for approximately 2% of company sales, he said.
“For sure, the duration of the conflict is definitely a main driver here,” Bellet said.
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Coca-Cola CFO John Murphy
The beverage company is primarily focused on ensuring the safety of its employees and operations in the region, according to Murphy. The conflict “was certainly not on our radar screen” a couple weeks ago, he said.
“It's just another example of the need to have a playbook that you can quickly bring into action,” Murphy said.
✏️ Share your thoughts. How is the fallout from the Iran war impacting your businesses or strategic thinking? Hit Reply to this newsletter to weigh in.
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