Why CEOs Should Prepare for a Prolonged Energy Shock

The prevailing market view — reflected in the EIA outlook and leading investment bank base cases — is that the current disruption around the Strait of Hormuz will begin to normalize before the end of June 2026, with maritime flows gradually recovering during 2H26.

This is the outcome everyone should hope for, but CEOs cannot build their plans only around the best scenario. If the consensus is wrong and the energy shock extends through year-end, companies need to prepare in advance and develop contingency plans for a prolonged energy shock.

In this scenario the Strait of Hormuz remains restricted through December 2026, keeping oil, LNG, fertilizer and refined-product flows under pressure for the rest of the year, contributing to broader inflationary pressure across industrial supply chains. Key assumptions to consider in a prolonged energy shock scenario

The assumptions considered under this macro scenario are based on stress cases from recognized energy agencies and leading financial institutions, complemented by SL Intelligence’s analysis of the implications for Mexico under a prolonged energy shock scenario and how it translates into concrete risks and contingency plans for Mexican businesses.

The central premise is a continued restriction in the Strait of Hormuz through December 2026, at only 5–15% of normal transit capacity, constraining flows from the Gulf primarily for oil, liquefied natural gas (LNG), refined-products, and fertilizers. This combined with limited production increases from non-OPEC producers, mainly from the United States, Brazil, and Guyana, would increase oil prices materially versus the base forward curve for 2H26, with Brent and WTI moving into a US$120–150/bbl and US$110–140/bbl range, respectively. 

Global LNG markets would also tighten significantly, particularly in Asia. The direct impact on US natural gas prices would be more limited, although higher LNG export demand could add upside pressure during 4Q26. 

The most acute pressure would be concentrated in refined products, primarily jet fuel and diesel, where supply disruption, inventories, and refining capacity are more constrained than in oil markets. This pressure would be amplified by the US driving season, which typically runs from late May to early September and increases gasoline demand and refinery margins, commonly measured through crack spreads. The latest EIA data already points to a tight refined-products market, with gasoline and distillate inventories 5% and 9% below their five-year averages, respectively, while refinery utilization is running above recent historical levels, leaving limited spare capacity to increase supply. 

For Mexico, the scenario assumes no material demand destruction in gasoline and diesel, as the main assumption is that the government will continue to stabilize domestic prices. PEMEX would continue importing refined products at volumes broadly similar to 1Q26, given that domestic refining capacity was at high utilization (during the first quarter) and output is not expected to increase materially during the rest of the year. The Mexican government is directly exposed to international refined product prices, even if domestic pump prices remain contained.

Implications for Mexico

A prolonged energy shock would improve the economics of upstream activity in Mexico, particularly field optimization, well interventions and short-cycle production recovery projects. Private producers would benefit from higher crude prices through stronger revenues and improved project economics; however, a large share of the upside would be captured by the Mexican state through royalties and profit-sharing mechanisms. 

PEMEX would also generate higher upstream cash flows and larger contributions to SHCP through the Derecho Petrolero para el Bienestar.

Natural gas is expected to face a more limited direct impact from the conflict because Mexico remains primarily linked to Henry Hub- and Waha-based US gas benchmarks, rather than global LNG spot markets. Normal seasonal escalation is still expected in 4Q26, with additional upside risk if US LNG export volumes increase faster than production growth in basins connected to Henry Hub.

Refined products are the main channel through which a continued shock would affect Mexico because the country is exposed to US Gulf Coast parity pricing for both imported and domestically produced volumes. The impact is not limited to imports: PEMEX’s gasoline, diesel and jet fuel production also carry an economic opportunity cost linked to international references.

This exposure matters because Mexico relies materially on refined-product imports. In 2025, gasoline imports were broadly comparable to domestic production, diesel imports covered roughly one-third of supply, and jet fuel also required meaningful imports to meet aviation demand.

At the pump, gasoline and diesel prices are stabilized by the government, mainly through SHCP’s IEPS tax mechanism and coordinated price-stabilization measures with SENER. Under our scenario analysis, the cost of these measures would rise faster than the incremental upstream revenue and fiscal contributions generated by PEMEX and private operators, hence creating a high-price / low-cash paradox for PEMEX: while the company benefits from stronger upstream economics, it could face reduced budget flexibility if the government prioritizes fuel subsidies and fiscal stabilization.

The evolution of diesel prices will be critical to monitor, given its broad economy-wide transmission effect: diesel is embedded in nearly every physical supply chain and is also used for backup electricity generation. Jet fuel could face the highest price pressure on a per-product basis, but its impact on most Mexican businesses would be narrower, concentrated mainly in aviation and tourism.

Contingency Actions and Key takeaways for CEOs

A prolonged energy shock should be managed as a strategic contingency plan, not only as a procurement or fuel-cost issue. The priority is to protect continuity of operations, profitability, liquidity and supply-chain flexibility before energy markets become tighter.

•       Create a war-room dashboard tracking prices, inventories and supply indicators for the key fuels, chemicals and inputs that affect your business disrupted by the war in Iran. 
•       Define trigger points for action, specific threshold, price, inventory coverage, longer import lead times or evidence of localized fuel shortages. 
•       Map total energy exposure, separating direct fuel use from indirect exposure through freight, suppliers, imported inputs, backup generation and energy-intensive materials. 
•       Review contract pass-through mechanisms with suppliers, logistics providers and customers, understanding how energy-cost adjustments can be transferred or recovered. 
•       Secure inventories and critical supply in advance, including fuel, logistics and other critical inputs for your business exposed to price volatility or shipping delays. 
•       Evaluate pre-purchases or supply reservations, to secure supply beyond short-term inventories, balancing price risk against storage capacity, liquidity needs and carrying costs. 
•       Recalculate cash needs under stress scenarios (a “no-subsidy diesel” case, for example) to understand exposure if fuel stabilization becomes insufficient, delayed or partially withdrawn. 
•       Evaluate working capital requirements to accommodate higher inventories, supplier prepayments, shorter payment terms and fuel-price volatility.  
•       Assess hedging strategies, including partial hedges, collars or fixed-price supply agreements.
•       Build energy resilience for critical operations: through solar, batteries, efficiency upgrades and backup systems that reduce reliance on diesel generation. 
•       Analyze natural gas alternatives where applicable, evaluate use of compressed natural gas, virtual pipelines and dual-fuel systems to reduce reliance on diesel. 
•       Companies that sell oil, services or other goods to PEMEX, or that expect cash-call contributions, should reassess working-capital exposure and funding needs in case Pemex faces delayed budget authorizations or slower payment cycles. 

Companies would benefit more from assigning resources to develop practical contingency plans than from trying to predict whether a prolonged energy shock becomes the base case. As the traditional proverb says, “Hope for the best, prepare for the worst.”