Business

By Dawn Chmielewski and Jody Godoy

LOS ANGELES, June 6 (Reuters) – As he spoke at a gathering on Saturday to protest Paramount Skydance’s proposed acquisition of Warner Bros. Discovery, stand-up comedian Adam Conover framed the ongoing media consolidation as an existential threat to an industry that made the United States a cultural power. 

“It’s about to die, and that’s why I feel so passionately about this issue,” he said. 

Conover was a featured speaker on Saturday at an event billed as the first stop in a three-city “Main Street vs. The Merger” tour bringing together entertainment workers, small business owners and politicians who oppose Paramount Skydance’s plan to absorb Warner Bros. Discovery in a $110 billion transaction.

About 100 people gathered at Lumiere Music Hall in Los Angeles for the event, which was organized by advocacy groups, the Writers Guild of America and industry workers who wanted to voice their concerns about the merger.

U.S. antitrust regulators appear poised to approve the combination, amid assurances from Paramount Skydance that the deal would not hurt other studios or creative talent. CEO David Ellison has pledged that the combined Paramount and Warner studios would stay productive by releasing at least 30 films a year.

But a group of ‌U.S. states including California and New York are preparing a lawsuit to block the deal, sources familiar with ​the matter told Reuters on Friday.

Conover knows firsthand the toll of cost-cutting from media mergers. After AT&T’s 2018 acquisition of Time Warner, his TruTV show “Adam Ruins Everything” was canceled, putting employees, “countless” contractors and more than 100 others out of work.

The job losses reflect an entertainment industry where employment has declined since its peak in late 2022.

California has been especially hard hit, shedding 17,234 positions from 2019 through 2023, according to the Milken Institute. It concluded that a combination of factors — including shrinking television ad revenue and stagnating streaming growth — convinced studios to look for less-expensive places to make movies and series.

The occupancy rate in Hollywood’s sound stages has fallen to 62% in the first half of 2025, down from nearly full occupancy in 2016, according to Film LA, the non-profit organization that coordinates filming in greater Los Angeles. The International Alliance of Theatrical Stage Employees, which represents 170,000 behind-the-scenes professionals, has said its members worked about 36% fewer hours than in 2022.

Matt Radecki, a co-founder of the Different by Design post-production facility in Los Angeles, fears a Paramount Skydance-Warner Bros. Discovery merger will result in fewer buyers for documentary films such as the Oscar-winning “Navalny,” which was produced by two Warner units, HBO Max and CNN Films.

“This is the biggest thing that we’ve faced,” Radecki told attendees on Saturday. “The places we work with are closed … They’re gone, and they’re never coming back, and we don’t want to see that happen to HBO or CNN or CNN Films.”

Former Federal Trade Commissioner Alvaro Bedoya expressed optimism that California Attorney General Rob Bonta could block the merger. Bonta could argue that the Paramount Skydance-Warner deal lessens competition among film studios, thereby indirectly affecting workers.

But it is also possible in the U.S. to block a merger by arguing it would decrease competition for specific types of labor. Antitrust authorities did so once before, in the case of publisher Penguin Random House’s bid to buy rival Simon & Schuster in 2022.

California could point to that precedent in any labor-focused challenge, said Ioana Marinescu, a University of Pennsylvania economist who wrote the Biden-era Justice Department’s guidelines on labor market issues.

“For some workers it could be that jobs at these two companies are really special, and this is really what they want,” she said. “And there isn’t necessarily a very close substitute. And those are the people for whom it’s going to make an adverse impact.”

(Reporting by Dawn Chmielewski in Los Angeles and Jody Godoy in New York; Editing by Edmund Lee, Sergio Non and Franklin Paul)

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RIO DE JANEIRO, June 7 (Reuters) – Etihad Airways is ordering more widebody planes as the Middle East carrier expects to be flying about 8% more than a year ago by June 15, CEO Antonoaldo Neves said in an interview.

He said on the sidelines of a global gathering of airline CEOs in Brazil on Saturday that the Abu Dhabi carrier is buying widebody planes in the double digits, declining to specify further.

Etihad is restoring flights after making cuts in March as the U.S.-Israeli war on Iran turned regional, raising fuel prices, Neves said.

He said Etihad does not plan to trim costs by cutting flights at the moment.

“The biggest cost we have is an empty plane,” he said. “So the way I cut cost is I don’t have empty planes.”

(Reporting By Allison Lampert in Rio de Janeiro; Editing by William Mallard)

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By Joe Brock

RIO DE JANEIRO, June 6 (Reuters) – Soaring jet fuel prices driven by conflict in the Middle East are likely to push more airlines into bankruptcy and spur more sector consolidation this year and next, the head of the global airline body said on Saturday.

Global airlines are grappling with higher fuel costs driven by the U.S. and Israel’s war with Iran, which has choked jet fuel supplies and disrupted key air corridors, forcing costly detours.

Budget carriers have been among the hardest hit, lacking higher margin revenue streams such as premium cabins, high-paying travelers and credit card loyalty programs.

The strain is already showing: U.S. budget airline Spirit Airlines collapsed last month, and it will not be the last, said Willie Walsh, director general of the International Air Transport Association, the industry’s main trade body.

“Unfortunately, I think there will be some carriers that will find this high fuel price very difficult to cope with,” Walsh told Reuters at IATA’s annual summit in Rio de Janeiro, adding he expects some airlines to go out of business and others to be acquired by larger carriers.

Airlines are also expected to protect margins by cutting unprofitable routes, while fares, which have surged since the outbreak of the Iran war, are unlikely to come down soon, Walsh said.

Even so, the pressure does not spell the end of the low-cost airline model, which continues to thrive outside the United States, where the big three carriers, United Airlines, Delta Air Lines and American Airlines, are squeezing out budget competitors, Walsh said.

“I don’t see that the low-cost model is broken; in fact, quite the opposite,” he said, highlighting Ryanair’s strong performance in Europe as an example.

There is one blockbuster deal Walsh does not see happening: United Airlines CEO Scott Kirby’s audacious proposal to buy arch rival American Airlines and create a U.S. aviation behemoth. The idea, which surfaced earlier this year, failed to get done despite Kirby raising it with President Donald Trump.

“I don’t think that’s going to happen. I think the regulatory hurdles would be very significant. I don’t know whether that was a genuine effort to pursue consolidation or Scott just trying to stir up some media,” Walsh said.

MIDDLE EAST AIRLINE WOES

The Iran conflict has upended traffic flows through Middle Eastern hubs such as Dubai, Doha and Abu Dhabi, creating acute challenges for Gulf carriers including Emirates, Qatar Airways and Etihad. 

Walsh said he didn’t think the conflict would do permanent damage to the Gulf as an aviation hub given its strategic geographic importance and the value of the popular Gulf carriers, which account for 14% of global capacity.

“That capacity cannot be replaced by airlines from other regions around the world,” Walsh said.

“Once things settle down, I would expect the Gulf carriers to regain their important position in the market.”

Adding to the strain is the slow pace of aircraft deliveries from Boeing and Airbus, along with engine delays from GE Aerospace and Pratt & Whitney, a unit of RTX, limiting airlines’ ability to expand fleets and improve efficiency.

Walsh said the industry is increasingly frustrated by the delays, particularly as engine makers post strong profits while airlines struggle. He estimates supply chain disruption cost airlines about $11 billion last year.

“We’re disappointed that they’re not moving faster. We’re disappointed that they’re not sharing the pain that the airline industry is sharing,” he said.

Aircraft and engine makers have said that much of the delays are out of their control, stemming from post‑pandemic supply chain disruptions and political trade disputes.

Walsh said competition will eventually emerge from China, where Comac is developing aircraft to rival Boeing and Airbus, though it still faces certification hurdles in Europe and the United States and remains reliant on Western engines and avionics.

“Probably 10 to 15 years from now, people won’t just talk about Airbus and Boeing. It’ll be: Airbus, Boeing, Comac,” he said.

As airlines come under financial strain and climate policies lose momentum in the U.S. under Donald Trump, industry leaders have grown more cautious about meeting a 2050 net zero emissions target.

Walsh said IATA is not ready to abandon the goal.

“I certainly believe it’s more challenging to achieve net zero in 2050 because we’ve not made the progress that we had expected to see on the development of sustainable fuels,” he said.

(Reporting by Joe Brock; Editing by Sanjeev Miglani and Rod Nickel)

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By Rajesh Kumar Singh

RIO DE JANEIRO, June 6 (Reuters) – Southwest Airlines expects Boeing’s long-delayed 737 MAX 7 to enter revenue service in 2027 and remains focused on the MAX family rather than adding another aircraft type to reduce risk, Chief Operating Officer Andrew Watterson told Reuters on Saturday.

Asked about Airbus’s A220, Watterson said Southwest was focused on the MAX.

“Diversification doesn’t come through a second fleet type,” Watterson said in an interview on the sidelines of the International Air Transport Association’s annual meeting ​in Rio de Janeiro. “A second fleet type can increase your risk.” 

“It doesn’t make sense to lose focus on that,” he added.

The MAX 7 is still awaiting certification from the U.S. Federal Aviation Administration. Watterson said Southwest plans to do about six months of internal work after certification, including adding the aircraft to its operating specifications and manuals.

“The clock starts when they certify it,” he said.

Watterson said the MAX 7 delay had not forced Southwest to hold back specific routes, but had limited its ability to better match aircraft size with demand. The penalty, he said, is having too many larger aircraft and not enough smaller jets for periods or markets with lower demand.

STARLINK ROLLOUT

Southwest is also moving ahead with Starlink-powered Wi-Fi, but Tony Roach, the airline’s chief customer and brand officer, said the carrier has not ruled out Amazon’s Leo satellite network.

Roach said Southwest expects to have an aircraft serviceable with Starlink later this month.

The airline has targeted equipping 300 aircraft with Starlink by year-end, but the pace depends on how fast Starlink can supply equipment, the executives added.

“Our tech ops can retrofit as fast as Starlink can deliver,” Watterson said.

Watterson said activist investor Elliott Investment Management was right that Southwest had been too slow to change, even though many changes were already underway.

“What Elliott was unequivocally correct about is we were too slow,” he said.

Watterson said investors had underestimated Southwest customers’ willingness to pay for new products, and said revenue per available seat mile would be the “litmus test” for whether the changes are working. 

(Reporting by Rajesh Kumar Singh in Rio de Janeiro)

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The economy, inflation and how those forces could impact the lives of Americans were front and center over the past week. Trips to the grocery store or gas station are more painful than they were last year, and rising costs are impacting the decisions of both households and businesses.

Here’s a snapshot of prominent economic data and news that occurred over the past week and what it potentially means for you.

U.S. employers added a surprising 172,000 jobs in May as the labor market continued to show resilience in the face of rising costs from the Iran war.

The Labor Department reported Friday that job growth was down slightly last month from a revised 179,000 in April. The unemployment rate stayed at a low 4.3%

Hiring has bounced back this year from a miserable 2025, showing unexpected strength in the face of economic uncertainty and painfully high energy prices caused by the Iran war.

Unemployment remained at a low 4.3% in May.

U.S. job openings jumped in April, which at some level suggests Americans grew more comfortable about leaving a job to find a better paying one.

U.S. employers posted 7.6 million job vacancies in April, the Labor Department reported Tuesday, up from 6.9 million in March and the most since May 2024. Economists had forecast just 6.8 million openings.

The department’s Job Openings and Labor Turnover Survey (JOLTS) showed that layoffs fell but so did the number of Americans quitting their jobs. And the report’s measure of gross hiring also dropped in April, suggesting that companies are not laying off many people, but also are not hiring aggressively.

The number of Americans filing for jobless aid hit their highest level in four months last week, though weekly statistics for hiring can be very volatile.

U.S. applications for unemployment benefits for the week ending May 30 increased by 13,000 to 225,000, the Labor Department reported Thursday. That’s the most since early February, before the U.S. and Israel launched attacks on Iran, but still a historically low level. Analysts surveyed by FactSet expected 211,000 new applications.

Weekly filings for unemployment benefits are considered a proxy for U.S. layoffs and are close to a real-time indicator of the health of the job market.

The average long-term U.S. mortgage rate eased this week from its highest level in nine months, somewhat of a relief for prospective homebuyers.

The benchmark 30-year fixed rate mortgage rate fell to 6.48% from 6.53% last week, mortgage buyer Freddie Mac said Thursday. The average rate remains below 6.85%, where it was a year ago, but twice what they were during the pandemic.

When mortgage rates decline they give homebuyers more purchasing power.

Rates have been mostly trending higher since the war with Iran began, disrupting the passage of tankers ferrying crude oil from the Persian Gulf to customers worldwide. That’s sent oil prices sharply higher — a key driver of inflation.

Stocks ended the week on a down note Friday as big technology companies sold off and weighed down the broader market.

Meanwhile, bond yields surged as a strong jobs report continued to dim expectations that the Federal Reserve will cut its benchmark interest rate this year.

Nvidia and Broadcom declined. They were among the biggest weights on the broader market countering broader gains. More stocks were rising than falling with the S&P 500. Many of the bigger tech stocks have have soared in value and can have an outsized influence on the broader market.

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By Allison Lampert and Gabriel Araujo

RIO DE JANEIRO, June 6 (Reuters) – Deferring jet orders due to uncertainty and higher jet fuel prices caused by the war in Iran would be unwise for Middle Eastern carriers, as the decision could be costly in the long term, a vice president of the airline trade group IATA said on Saturday. 

Kamil Al-Awadhi, regional VP for Africa and the Middle East, told reporters that he does not expect the war and higher costs to affect aircraft orders from Middle Eastern carriers. The region’s airlines are major buyers of jets from planemakers Boeing and Airbus. 

Deferrals are “not wise because that deferral will cost you,” he said, citing long waiting times for aircraft. He made the remarks on the sidelines of the International Air Transport Association’s (IATA) annual summit this weekend in Rio de Janeiro. 

Given the waiting time for Airbus’s latest generation of single-aisle planes, it would take years for operators to get their planes, Al-Awadhi said.

“The plan is to continue where we’re going … even though this is a hiccup,” he added. 

Global airlines are slashing flights and raising fares and fees to offset higher costs, even as airports in the Middle East have been targeted by air strikes linked to the war in Iran. 

Al-Awadhi also said he was worried that an Iranian attack that killed one person at an airport in Kuwait earlier this week resulted in damage to a terminal used by foreign carriers in the country. He said he believed the terminal would take at least a year to repair.

“My personal guess, looking at the damage from the videos and pictures that were sent to me, it’s going to take ages,” he said. “So my concern is, will the other carriers be able to go into Kuwait?”

He said Kuwait would either need to fast-track completion of part of a new airport terminal,  or allow foreign airlines to operate out of  terminals currently used by domestic carriers such as Kuwait Airways. 

“It will take some tough decisions and logistics to get that sorted,” he added.    

(Reporting By Gabriel Araujo and Allison Lampert in Rio de Janeiro; Editing by Sanjeev Miglani)

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By Gabriel Araujo

RIO DE JANEIRO, June 6 (Reuters) – Brazilian airline Azul is stepping up capacity cuts amid higher jet fuel prices linked to the Iran war, and the carrier will continue to trim flying to protect cash in an uncertain environment, CEO John Rodgerson said.

Rodgerson told Reuters the industry’s largest companies were reducing capacity to better align with demand at higher cost levels, and Azul would follow suit, going beyond earlier cuts as the conflict drags on.

“When we made our initial cuts, we thought the war would be over by now,” he said in an interview on Friday, in the build-up to a meeting of global airline chiefs in Rio de Janeiro.

“But it’s continuing, so we’re going to continue to opportunistically cut some frequencies, make sure that we’re only flying things that make sense.”

Most of Azul’s reductions in the second quarter were on international routes, with further adjustments focused on domestic frequencies rather than pulling entire cities, Rodgerson said.

“Do you fly to Curitiba six times a day? Maybe with these fuel prices, it should be four.” The airline was prioritizing its main hubs in Campinas, Belo Horizonte and Recife, he added.

“We’re yet to pull cities, but that’s always on the table. But you first start with utilization and cutting frequencies.

“You don’t want to be utilizing an aircraft 13, 14 hours a day when fuel prices double.”

Rodgerson said Azul’s balance sheet after a major debt restructuring put it in a stronger position than some peers to adapt. It exited Chapter 11 proceedings in February with backing from United Airlines and American Airlines.

Azul expects pricing to remain under pressure in the seasonally weaker second quarter, but sees scope for higher fares to stick as demand strengthens into the third and fourth quarters, he said.

(Reporting by Gabriel Araujo; Additional reporting by Luciana Magalhaes; Editing by Andrew Heavens)

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Texas Gov. Greg Abbott expressed concern Friday that a new factory isn’t expected to start breeding sterile New World screwworm flies for more than a year as a big part of the effort to stop its flesh-eating larvae from threatening the $113 U.S. billion cattle industry.

Abbott pledged Texas will help the U.S. Department of Agriculture accelerate construction of the $750 million breeding facility outside Edinburg, Texas, about 20 miles (32 kilometers) north of the U.S.-Mexico border. He said Texas is willing to spend its own funds to see that construction is “24 hours a day, seven days a week.”

Without greater sterile fly production, Abbott said during a news conference in the state capital of Austin, “We cannot make it through a second summer.”

The USDA confirmed an infestation of New World screwworm fly larvae this week in a 3-week-old calf in La Pryor, Texas, about 100 miles (161 kilometers) southwest of San Antonio and 50 miles (80 kilometers) from the Mexico border. It was the first case confirmed in Texas since 1966.

The department on Friday announced a second confirmed case found in a one-month-old calf in Zavala County, Texas, about 5.6 miles (9 kilometers) from the first case.

The new factory in Texas is the larger of two fly-breeding facilities funded by the USDA.

Separately, the USDA invested $21 million in converting a site in southern Mexico from breeding fruit flies to breeding screwworm flies. That factory is expected to start producing flies next month, eventually 100 million a week.

The other factory in Texas will be the size of two Costco stores, said Rear Admiral Michael Schmoyer, a member of the USDA’s screwworm response team. It is expected to produce up to 300 million flies a week.

Officials believe both factories are needed to eradicate the fly from the U.S., Mexico and Central America.

Schmoyer said the federal government has already shortened the planning and construction timeline considerably — drafting plans in a few months rather than taking a year, for example. U.S. Agriculture Secretary Brooke Rollins said the USDA hopes it will be running sooner than its planned November 2027 opening date.

But Abbott said Texas is determined to have construction go even faster.

“This is going to spread over the course of the summer,” he said of the fly.

An untreated infestation of New World screwworm fly larvae can kill an animal, but there are now a dozen government-approved medications to treat livestock. Federal and state officials have been quick to stress that fly’s larvae — which feed on living material — do not infest meat or fruit.

“There’s a food production issue, but not a food safety issue,” Abbott said.

Derrell Peel, a professor of agribusiness at Oklahoma State University, said the beef supply isn’t likely to be affected unless officials restrict cattle movement more than locally or unless infestations appear in feedlots or other places where cattle are concentrated. He does not expect that to happen.

“It’s probably not a major market issue,” he said.

Consumers are paying record beef prices because of a tight cattle supply, and Peel expects prices to rise even further when ranchers take heifers out of the supply chain to rebuild their herds. But he said the arrival of the screwworm in Texas “doesn’t change the supply fundamentals.”

Screwworm outbreaks in Mexico starting in 2024 prompted U.S. Agriculture Secretary Brooke Rollins to close U.S. ports of entry to its cattle in May 2025. Mexican imports were once about 1.2 million animals a year and dropped about 80% last year, according to industry statistics.

But Peel said Mexican imports were only about 3% of the U.S. cattle supply.

“It’s been just one more thing on top of others,” he said, not a major driver of prices.

The New World screwworm fly was an annual, warm-weather scourge of U.S. cattle ranchers from at least the 1930s through the 1960s.

But breeding sterile flies and dropping swarms of them from planes eradicated it from the U.S. by the early 1970s, except for a brief outbreak among deer in the Florida Keys in 2016 and a case confirmed in a Maryland man who traveled to El Salvador last year. Until an outbreak in Panama in 2023, the fly had been considered eradicated outside its remote, southernmost region bordering Colombia.

Females mate once in their monthslong lives, and if they breed with sterile male flies, their eggs won’t hatch after being laid in open wounds and mucous membranes of warm-blooded animals, including cattle, wild mammals, household pets and humans.

Once the U.S. and other nations eradicated the fly years ago, they shut down fly-breeding facilities until there was only one left in the Western Hemisphere, in Panama. It can produce about 117 million flies a week.

However, past eradication efforts needed about 500 million flies a week, said Schmoyer, a member of the USDA’s screwworm response team, during Abbott’s news conference.

Schmoyer estimated that the USDA already has dispersed 130 million flies in Texas since January, most of them from planes, and those drops are now about 4 million a week. It also is releasing another 4 million a week in the ground as pupae, which are flies in the stage between larvae and adult.

But, even with those millions of flies, the USDA must be strategic about where to disperse them, Schmoyer told reporters. Federal and state officials are using scientific models to predict how the fly will move.

“In essence, it’s not where the flies are today, but where they could be weeks from now,” he said.

Part of the science involves traps, and Texas State Veterinarian Bud Dinges said they’ve been deployed up to 120 miles (193 kilometers) away from La Pryor to monitor the fly’s movement.

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By Rajesh Kumar Singh and Allison Lampert

RIO DE JANEIRO, June 6 (Reuters) – Global airline chiefs open their annual summit in Rio de Janeiro on Saturday facing a sharper test of the industry’s post-pandemic recovery, as the Iran war drives up fuel costs and disrupts airspace while carriers try to cushion the blow with higher fares and tighter capacity.

The June 6-8 annual meeting of the International Air Transport Association (IATA) comes as that fuel shock collides with another problem airlines cannot quickly fix: a shortage of new aircraft. 

Boeing and Airbus delivery delays have forced many carriers to keep older, less fuel-efficient jets in service for longer, raising maintenance and fuel bills just as oil prices have climbed.

IATA, which represents more than 370 airlines accounting for about 85% of global air traffic, had forecast a record $41 billion in net profit this year for the industry before the war. Industry executives and analysts expect that outlook to be lowered at the meeting.

A Deloitte survey of 21 global airline CEOs published this week found that fuel price volatility and inflation sit at the top of the industry’s risk agenda, pushing carriers to focus more heavily on cost control and financial health. 

“Together, they’ve turned what was supposed to be a record year into a fight for margin,” the survey said.

Brazilian airline Azul is planning to trim more flights to meet demand due to higher jet fuel prices, CEO John Rodgerson said.

Nikhil Ravishankar, CEO of Air New Zealand, said airlines can only raise ticket prices so much to offset higher fuel costs.

“The market will respond and demand will soften and then you fly less,” he said in an interview.

Airlines have two primary costs: fuel and labor. Sudden increases in fuel are hard to absorb because many tickets are sold weeks or months before travel. Longer routes also burn more fuel and make aircraft and crews less efficient. 

The challenge is how much of the latest fuel hit can be passed on to travelers before higher fares start to weaken demand. 

FARE POWER

So far, travel demand has held up in several large markets, especially among premium and corporate travelers, giving carriers more room to raise fares.

In the United States, domestic published fares as of May 25 showed robust demand and successful pass-through of higher fuel costs, with one-week-out fares up 35.8% year-on-year and four-week-out fares up 39.4%, according to Raymond James.

“The willingness to pay over the past few years, crisis and no crisis, from the premium side has been really strong, and we see that strength continuing,” Alexandre Lefevre, Air Canada’s vice president of network planning and global sales, told Reuters.

Still, there are limits. Higher fares can help airlines recover part of their fuel bill, but they also risk pushing out travelers with tighter budgets. That risk is greater in regions where currencies are weak, consumer spending is under pressure or airlines lack the pricing power of large network carriers.

   Some carriers are still planning for growth. Singapore Airlines is in talks for at least 50 large wide-body jets, while Qantas is weighing an order for about 20 Airbus or Boeing wide-body aircraft, Reuters reported this week.

(Reporting by Rajesh Kumar Singh and Allison Lampert in Rio de Janeiro. Additional reporting by Gabriel Araujo in Rio de Janeiro; editing by David Gaffen and Louise Heavens)

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By Vladimir Soldatkin and Olesya Astakhova

ST. PETERSBURG, Russia, June 6 (Reuters) – Rosneft Chief Executive Igor Sechin said on Saturday that U.S. energy companies were the main beneficiaries of the closure of the Strait of Hormuz but warned that continued tensions in the artery for one fifth of the world’s crude would undermine long-term demand for oil. 

Iran blockaded the Strait, the main route for about a fifth of world oil supplies and other vital goods including fertilisers, after the United States and Israel attacked Iran and killed Supreme Leader Ayatollah Ali Khamenei in February. The U.S. has blockaded Iranian ports. 

Sechin, a close ally of President Vladimir Putin and one of the most influential men in Russia’s energy sector, cast the U.S. actions as an attempt to change the fundamental contours of the global energy markets to suit U.S. interests, but added that the strategic risks had not been fully assessed.

“The closure of the Strait of Hormuz is an attempt to reshape global energy market regulations to benefit the United States. The measures taken to block the strait were aimed at Iran, but backfired on the entire world. The strategic risks were underestimated,” Sechin said at the St. Petersburg International Economic Forum.

“The main beneficiaries, of course, were American companies, which gained non-competitive advantages and the ability to secure high-cost supplies,” he said. “Continued tension in the Strait of Hormuz for a long time undermines the long-term demand for oil. It may also trigger another surge of interest in alternative energy.”

The U.S. is the world’s biggest oil producer, followed by Saudi Arabia and Russia. 

Russia’s oil and gas tax revenue, which accounts for around a fifth of total budget income, increased by 32.4% year-on-year in May to 678.9 billion roubles ($9.3 billion), Finance Ministry data showed, thanks to a global oil price rally fuelled by the Middle East war. The U.S. has also extended a sanctions waiver allowing purchases of Russian seaborne oil to aid “energy-vulnerable” countries hit by the Iran war.

Sechin said that China had been best prepared for the crisis due to well-thought-out state policy, but cautioned that other major global routes, such as Malacca, Bab El Mandeb and Gibraltar straits could also be under the risk of disruption.

If the Strait opens in the near future, then the oil price will be at $95 to $96 per barrel by the end of the year, and in a year it will drop to $80 to $85, and by the second half of 2027 there will be a return to market fundamentals, he said.

A DANGEROUS WORLD 

In a speech entitled “The beginning of the end or the end of the beginning: what is left at the bottom of Pandora’s box?”, Sechin said problems were “snowballing” in the world with the militarisation of major powers, the biggest financial market bubble since the 19th century and a looming deficit of electricity, food and water.

“At the bottom of the box, we will inevitably find a global shortage of electricity, food shortages, copper and other metals, and water shortages,” Sechin said. 

Sechin, who is known for his skepticism about Russia’s cooperation with the Organization of the Petroleum Exporting Countries, said the OPEC+ group has lost some of its potential following the United Arab Emirates’ departure from the alliance, as well as the earlier exits of Qatar and other countries.

“As a result, the alliance’s production has fallen from 58 to 37 million barrels per day over the past 10 years,” he said.

Sechin also said that most major OPEC+ members have increased production since the agreement was signed in 2016. In Russia, oil production fell by 1.5 million barrels per day.

“This is a 15% decline that will need to be offset by necessary investments of at least 10 trillion rubles. We expect that investment cooperation between the alliance’s member countries and our country will also expand,” Sechin said.

(Reporting by Vladimir Soldatkin and Olesya Astakhova; editing by Guy Faulconbridge, Kirsten Donovan)

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