Greetings,

Supply chain disruptions from the ongoing closure of the Straight of Hormuz are getting more intense. Commodity traders are bracing for the fallout from hundreds of millions of undelivered cargoes as energy producers declare force majeure, and CFOs on both sides of the equation are bracing for disputes. More on that below.

Also in this edition:

• Appeals court backs IRS in key corporate tax case
• Execs view tariffs as permanent in scenario planning
• Litigation risk, red tape deter companies from US IPOs
• Trump says he'll remember companies that forgo tariff refunds

The closure of the Strait of Hormuz has led to Middle Eastern oil and gas producers declaring force majeure, resulting in undelivered cargoes and refinery output cuts. "We expect a lot of financial disputes and a lot of force majeure," says Mercuria Energy Chief Financial Officer Guillaume Vermersch. "How the situation plays out could shape some of the firm's profit this year." Vitol Group CFO Jay Ng and Trafigura Group CFO Stephan Jansma also highlight legal and operational risks.

The IRS has secured a significant victory in its battle against tax-motivated business transactions, with the 10th U.S. Circuit Court of Appeals upholding a lower-court decision against Liberty Global's "Project Soy." The ruling reinforces the economic substance doctrine, which prevents companies from engaging in tax-reducing maneuvers without a substantial business purpose.

A Bloomberg Intelligence survey of 150 executives from private equity, venture capital, asset management and investment banking shows that the risk of litigation is a primary concern for companies considering an initial public offering in the US. The survey shows that the threat of class-action lawsuits, regulatory burdens and the complexity of the IPO process are significant deterrents, causing the number of public companies to drop by 50% since 1996. Policymakers such as the Securities and Exchange Commission are addressing these issues to make public markets more attractive, with possible regulatory changes including biannual reporting and revised executive compensation disclosures.

President Donald Trump says he will remember companies that do not seek refunds for tariffs he imposed that the Supreme Court has ruled illegal. Trump has said companies such as Apple and Amazon are not seeking refunds to avoid offending him, a move he has called "brilliant." Meanwhile, retailers such as Levi Strauss and Gap have said they stand to benefit from potential refunds.

US executives are increasingly considering tariffs a permanent factor in scenario planning, with 86% incorporating them into operating models, per a PwC survey. This comes despite a Supreme Court ruling against the Trump administration's tariff regime. Other concerns include higher business taxes, cybersecurity threats and geopolitical uncertainty.

Private credit funds are struggling with rising borrowing costs as banks make lending terms more stringent and investors seek bigger payouts. The premium debt sought by investors has increased by about one-third of a percentage point this year, amid the 22% year-over-year decrease in business development companies' bond sales in the first quarter, JPMorgan Chase data shows. To manage costs, funds are turning to structured credit markets and shorter-maturity bonds, exemplified by Blue Owl's $400 million two-year bond deal with Pimco. The trend reflects growing concerns over the credit quality of private credit portfolios.

Artificial intelligence in accounting is advancing rapidly, but even the best models can fall short in critical areas. The 2026 Accounting AI Benchmark shows that Claude Opus 4.7, the top-performing model, achieves only 79.2% accuracy on real accounting workflows, with OpenAI's GPT-5.4 following at 77.3%. This error rate is significant, as misclassified transactions can affect financial statements and tax filings. CFOs are advised to evaluate AI tools based on task-level accuracy and to implement robust validation and control mechanisms to manage potential errors.