TotalEnergies expects that high oil prices will compensate for the cash flow impact of losing approximately 360,000 barrels per day (bpd) of oil production from the Persian Gulf, a loss triggered by the Iran war and the effective closure of the Strait of Hormuz. This production loss represents 15% of the supermajor's total output, but CEO Patrick Pouyanne explained that these Middle Eastern assets contribute less to cash flow per barrel than the rest of the portfolio due to higher regional taxation. At $60 per barrel, the lost volumes account for only about 10% of TotalEnergies' upstream cash flow.

Cash Flow and Price Sensitivity

Pouyanne stated that the company's expected cash flow growth for 2026 is largely driven by non-Middle East assets, and the higher oil prices observed since the crisis began more than offset the production loss. An $8 increase in Brent crude would be sufficient to offset the anticipated 2026 cash flow reduction from shut-in production, representing substantial additional cash flows given the company's price sensitivities. At the time of publishing, Brent was trading at about $122 per barrel, with Pouyanne expecting oil prices in 2026 to average at least $80 per barrel.

Operational Status and Restart Conditions

TotalEnergies will not resume Middle East production until the tense situation in the Strait of Hormuz improves. The company currently has nine oil tankers stranded in the Persian Gulf; one tanker exited in mid-April, but a second attempt failed after an attack on an Indian-flagged vessel. Pouyanne emphasized that restarting wells is less of an issue than getting empty tankers back into the Persian Gulf to carry oil, LNG, and oil products. The process requires letting full tankers exit and offload, then bringing in empty tankers for reloading, with trips to Asia taking 25 days and longer to Europe, leading to an estimated two-to-three-month timeline.

Regional Operations: Saudi Arabia and Qatar

In Saudi Arabia, the 460,000 bpd Satorp refinery resumed operations on April 14 and is expected to increase production to over 300,000 bpd next month, up from the current 230,000 bpd. The new Amiral petrochemical complex is scheduled to begin operations by the end of 2027 at the earliest. In Qatar, the North Field East gas expansion project will likely be delayed by up to two months, with first production currently targeted around the turn of the year.

Market Disruption and LNG Management

Pouyanne described the closure of the Strait of Hormuz as a major disruption to the global energy system, noting that oil price volatility in recent months has been the worst since the start of the century. He estimated that 500 million barrels of inventory have been used so far, a figure that could exceed 1 billion barrels in the coming month. Despite the shutdown of Qatar LNG production, TotalEnergies is meeting customer demand through its diverse project portfolio, producing LNG in 11 different countries. This allows the company to serve Asian customers by rerouting non-contracted volumes and avoiding force majeure declarations. Pouyanne highlighted that the decision to restart work on the Mozambique LNG project, due on stream in 2029, appears wise in hindsight, and TotalEnergies aims to sanction the Papua LNG project in Indonesia by the end of the year.