Energy companies brace for new Iran tension as cost of resilience mounts

Energy companies operating in the Middle East are preparing for another potential escalation in the Iran war, with executives warning that keeping businesses running through conflict comes at a growing financial cost.

Speaking to The National at Adipec in Abu Dhabi on Tuesday, industry leaders said they are now better prepared after months of adapting to disrupted supply chains. They have stockpiled critical supplies, shifted transportation routes and reduced workforces to withstand further disruption. Several executives said that resilience comes at a cost.

Their comments came after the US struck Iran's Qeshm Island on Monday night, targeting a missile launcher after an American drone was brought down near the Strait of Hormuz.

The attack raised new concerns about renewed regional fighting, as Americans headed to the polls for midterm elections that could influence Washington's next moves in the conflict.

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For energy companies, the question is no longer simply whether another escalation will occur but how long they can sustain operations if it does.

Sharif Foda, chief executive of energy services firm NESR, said his company had continued operating throughout the conflict by relying on domestic employees and maintaining sufficient supplies to withstand prolonged logistical disruption.

“We will be able to continue to operate as long as our clients are operating,” he said. “We are not going to evacuate. We are staying.”

Mr Foda said the company had adopted a 30, 60 and 90-day contingency strategy, stockpiling spare parts, chemicals and other essential materials inside countries where it operates.

The strategy allowed NESR to maintain operations even when international supply routes became unreliable.

“I am insisting on having a local workforce,” Mr Foda said. “You have to really look at the localisation as a must, not as a nice to have.”

Cost of survival

While some businesses have maintained operations, others have been forced to make difficult financial decisions.

Youssou Jules Diop, executive director of Senegalese engineering and procurement company Helix SEN, said the conflict had already forced his company to cut 30 per cent of its management team.

Show caption: Youssou Jules Diop, executive director of Senegalese enginee…

The company maintains its treasury, board and key decision-making functions in the UAE, which Mr Diop described as an important hub for African businesses. “The ABC of business is trust and confidence,” he said.

The financial pressure extends across the energy industry, particularly for companies dependent on maritime transport through the Strait of Hormuz.

Bruno Placha, a senior quality and regulatory professional, said the initial disruption had severely affected operations as vessels stopped entering the region. “If we don't have vessels, we don't have work,” he said.

The threat to shipping remains acute. The International Maritime Organisation said on Monday that at least 125 vessels had been attacked in and around the Strait of Hormuz since the war began, including 34 in October, the highest monthly figure so far.

Companies have since adapted by using alternative ports and moving more materials by road than by sea, Mr Placha said.

The adjustments have also involved workforce reductions and a greater focus on longer-term projects, allowing businesses to operate with less dependence on regular shipping movements.

George Alexopoulos, deputy chief executive of Greece's HELLENiQ Energy Holdings, said maintaining alternative supply arrangements had become essential, even when they were expensive.

After the conflict disrupted crude shipments from Basra in Iraq, the company turned to the North Sea, the US and West Africa for replacement supplies. “Optionality has a cost and especially at times of crisis,” Mr Alexopoulos said.

He cited tanker charter rates on Gulf routes to China reaching $1 million a day as an example of the extraordinary expenses companies face. “What is the alternative? Shut down your operations, so you have to go on.”

His comments echo concerns raised at Adipec on Monday, when Minister of Industry and Advanced Technology and Adnoc managing director and group chief executive, Dr Sultan Al Jaber, called for stronger energy infrastructure and diversified supply routes as shipping costs surged.

Prepared but vulnerable

Despite the industry adjustments, executives warn that another prolonged escalation could expose vulnerabilities that cannot be resolved quickly.

Robin Mills, chief executive of Qamar Energy, said companies had made significant progress in rerouting logistics, expanding port capacity, and using road and rail networks. But it is not enough for long-term resilience. “There's a limit to what can be done in the space of eight months,” he said.

Major infrastructure projects can take years to complete, leaving energy facilities and shipping routes exposed to further attacks.

Nevertheless, he said energy companies remained active, with growing demand for maintenance, repairs, security and infrastructure development.

That resilience comes as the UAE continues to emphasise the importance of avoiding another round of conflict, while remaining prepared for further escalation.

For Mr Alexopoulos, even an immediate end to hostilities would not bring an immediate return to normal business conditions. He warned that damaged infrastructure, refinery disruptions and shipping shortages could take several weeks to begin normalising, while a full recovery could take years.

His biggest lesson for companies navigating an increasingly unpredictable energy market was straightforward.

“Keep options. Develop and maintain options. Options have a cost, but in this environment you have to pay the 'option premium' in order to be able to handle this and the next and the next crisis,” he said.