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More than two and a half months have passed since the US launched military operations in Iran on February 28. The resulting closure of the Strait of Hormuz has caused gas prices skyrocket.
When construction companies announced their latest batch of earnings, they reported the first three months of 2026; the period when the war began and costs began to rise.
Executives at publicly traded construction companies acknowledged the headwinds the war has brought, although they have so far downplayed them.
Gasoline prices hit rock bottom
“During the quarter, the price of oil increased due to the conflict in [Iran],” said Kyle Larkin, Granite’s president and CEO.The company’s main oil exposures are liquid asphalt and diesel.
However, Larkin said the Watsonville, Calif.-based company regularly mitigates rising fuel costs by entering into fixed-price contracts, maintaining physical storage, applying financial hedges and inserting energy surcharges into contracts.
“While we will continue to monitor the market closely, we currently do not expect the current increases in oil prices to have a significant impact on our full-year outlook,” Larkin said.
In fact, Pontus Winqvist, CFO of Sweden-based Skanska, told Construction Dive that the The contractor anticipated a protracted conflict it would increase the price of oil and, in turn, increase the costs of asphalt or plastic for pipes. He also said that Skanska hedges against this risk.
“Some of our exposure is taken by subcontractors or our customers,” he said. “I can’t say that’s going to make a big difference to the bottom line.”
Impact on work in the Middle East
Other publicly traded contractors reported the effects the war has had on their work in the Middle East.
Jim Breuer, Fluor’s CEO, said the company’s activities in the region around the conflict “continued without interruption” and that the company has mitigated supply chain constraints there.
Dallas-based AECOM saw more impact on results during the company’s fiscal second quarter that ended March 31. However, executives said the company has already recovered.
“Underlying cash flow in the second quarter was consistent with our expectations, but offset by a delay payment terms in the Middle East business as well as longer-than-expected claims resolution on certain projects,” AECOM CFO Gaurav Kapoor said during the company’s earnings call. “Importantly, collections in the Middle East have already recovered in the third quarter.”
Chief executive Troy Rudd indicated that he expected work in the Middle East to grow “quite significantly”, but acknowledged that it would be difficult to predict the pace of growth in the future.
