Your Q2 2026 Form 10-Q is due August 11 if you are a large accelerated or accelerated filer. August 14 for non-accelerated filers. If you are drafting MD&A and risk factors this week, what happened this morning materially changed the disclosure landscape.
At the NATO summit in Ankara, Turkey, President Trump declared the interim ceasefire with Iran "over." He said so explicitly: "To me, I think it's over. I don't want to deal with them anymore." This followed overnight US strikes on more than 80 targets inside Iran in response to Iranian attacks on three commercial vessels transiting the Strait of Hormuz on Tuesday. The US revoked Iran's oil sanctions waiver that same day. The IMO's secretary-general urged all ship owners to halt transit through the Strait. WTI crude jumped more than 6.5% to approximately $75 per barrel. Brent rose 6.2% to approximately $79 per barrel.
Every company that added an Iran or Strait of Hormuz risk factor to its Q1 2026 10-Q, and dozens did, just produced a stale disclosure. And every company that did not add one in Q1 now needs to assess whether to add one in Q2. The companies in between, those with indirect exposure through fuel costs, logistics, input prices, or customer demand, need to apply the same analysis regardless of whether they import anything through the Strait directly.
This post covers exactly what the Q2 disclosure obligation is, what the three categories of company exposure look like, how to quantify the oil price impact for the MD&A, what the sanctions waiver revocation means for your disclosure even if you have no Iran exposure, and what a compliant risk factor update looks like for Q2.
What Happened This Morning and Why It Changes Your Q2 10-Q
Iran struck at least three commercial vessels transiting the Strait of Hormuz on Monday and Tuesday. The US military responded with strikes on more than 80 targets in Iran. The Kuwaiti military intercepted two Iranian ballistic missiles and 13 drones on Wednesday.
Trump's comments at the NATO summit in Ankara came after the second such escalation since the two sides signed an interim deal in mid-June. The strikes followed Tuesday's attacks on three commercial ships in the Strait of Hormuz.
The Memorandum of Understanding, signed June 17, laid out the terms for an extended 60-day ceasefire, with a deadline set to expire in mid-August.
US crude oil sharply jumped more than 6.5% to $75 per barrel. International oil benchmark Brent rose 6.2% to almost $79 per barrel, its largest one-day move up since the beginning of June.
At least four oil and gas tankers have turned back from attempting to transit the Strait of Hormuz since Iran launched attacks on three vessels near the vital waterway.
The Strait of Hormuz is a vital waterway through which about 20 percent of the world's traded oil passes in peacetime.
On Tuesday, the US revoked Iran's oil sanctions waiver, a key concession from the June MOU. The US clawed back oil sanctions waivers, a key concession offered to Iran as part of the memorandum of understanding.
The IMO secretary-general called on ship owners and operators to halt all transits through the strait to avoid the risk of attacks. "These reckless attacks have again placed innocent seafarers in grave danger. No seafarer should have to risk their life simply for doing their job."
Why this changes your Q2 10-Q is straightforward. The Q1 2026 risk factor environment assumed a functioning, if fragile, ceasefire. Companies that mentioned the Strait of Hormuz in Q1 could describe the risk as ongoing uncertainty. As of this morning, the ceasefire has been declared over by the US president, active military strikes are underway on both sides, the IMO has urged full avoidance of the Strait, and oil has moved 6% in a single day. That is a different disclosure environment from Q1, and the Q2 10-Q must reflect it.
What Did Companies Already Disclose About Iran in Their Q1 2026 10-Qs and Why That's No Longer Enough
Dozens of public companies added Iran or Strait of Hormuz language to their risk factors for the first time in their Q1 2026 10-Qs, reflecting the conflict that began with US-Israeli strikes in February. Companies across energy, industrials, chemicals, shipping, and consumer goods referenced the Strait as a potential supply chain and fuel cost risk factor.
The Q1 disclosures that are now outdated share a common structure: they described potential disruption to global oil supply and shipping routes as a risk, named the Strait of Hormuz as a key chokepoint, and referenced uncertainty about the duration and intensity of the conflict. Many noted that a ceasefire or diplomatic resolution could affect the trajectory of the risk.
That framing no longer applies. A disclosure that referred to the ceasefire as a potential moderating factor, or that described Strait of Hormuz disruption as a risk "if hostilities escalate," needs to be updated. As of today, the ceasefire has been declared over, hostilities have escalated, the Strait is actively dangerous to commercial shipping per IMO guidance, and oil prices have moved materially.
The specific problem under Item 105 of Regulation S-K is that a risk factor must accurately describe the material risks to the company given current facts and circumstances. A risk factor written in April 2026 that describes a mid-June ceasefire as a potential moderating factor, without being updated for today's events, is inaccurate by the time the Q2 10-Q is filed in August.
The additional problem under Item 303 is that the MD&A must discuss known trends and uncertainties. An oil price move of 6%+ in a single day, triggered by an event that creates ongoing uncertainty about the world's most important oil shipping chokepoint, is a known trend or uncertainty that management is aware of. Whether it is material depends on the company's fuel and commodity exposure. But the assessment must be made, documented, and, where material, disclosed.
Where in the Q2 10-Q Does This Disclosure Belong: Risk Factors, MD&A, or Both?
Three separate locations in the Q2 10-Q may require disclosure related to today's events. Each location serves a different purpose and has a different standard.
Risk Factors (Part II, Item 1A). The risk factor section in the quarterly report covers material changes to the risk factors previously disclosed in the annual report or the most recent quarterly report. If the Q1 2026 10-Q added a Strait of Hormuz or Iran risk factor, that risk factor must be reviewed for accuracy and updated if the facts have materially changed. Today's facts have materially changed. The update should reflect: the current status of the MOU (declared over by President Trump), the active military exchange underway, the IMO's recommendation to halt Strait transit, and the oil price movement.
If the company did not add a Strait of Hormuz risk factor in Q1 and today's events create a material risk that did not previously exist at material levels, a new risk factor may be required in Q2. The threshold is whether the risk is a material risk facing the company given its specific exposure.
MD&A Results of Operations (Part I, Item 2). If oil price movements or logistics cost increases from reduced Strait transit capacity have materially affected Q2 results, those effects belong in the results of operations discussion with quantification. A company whose Q2 fuel costs increased materially due to the Iran conflict should attribute and quantify that increase with the same specificity required for any other material cost driver.
MD&A Known Trends and Uncertainties. Item 303(b)(2)(ii) requires disclosure of known trends or uncertainties that management reasonably expects will have a material favourable or unfavourable impact on future revenues or income. An active military conflict in the Strait of Hormuz, with the ceasefire declared over and IMO advising ships to avoid transit, is a known uncertainty with material potential impact for any company with fuel, logistics, commodity, or international supply chain exposure. If that impact could be material to future results, it must be disclosed.
The Three Types of Companies and What Each Must Say
Not every company has the same disclosure obligation from today's events. The analysis is different for three broad categories.
Direct exposure companies: energy, shipping, airlines, chemicals, refining.
Companies that produce, transport, trade, or refine crude oil have the most direct exposure to today's events. The Strait of Hormuz disruption directly affects the availability and price of crude oil, petrochemical feedstocks, and refined products. For these companies, the disclosure is straightforward in its necessity, though challenging in its specificity.
The risk factor update should describe: the specific nature of the company's Strait exposure (production in the Gulf, shipping through the Strait, crude sourcing from the region), the current status of the MOU and active hostilities, the IMO's guidance to halt transit, and the company's current assessment of how it is managing the exposure (alternative routes, inventory positioning, hedging).
The MD&A for companies whose Q2 results were affected by the conflict must quantify the effect. A tanker company that rerouted ships around the Cape of Good Hope incurred measurable additional voyage costs. An airline that saw jet fuel costs spike on today's news will be able to quantify the expected Q3 impact in the known trends section.
Indirect exposure companies: supply chain, fuel costs, input prices.
The majority of industrial, consumer goods, retail, and technology companies are not direct participants in the Strait of Hormuz trade but are affected indirectly through three channels: fuel costs (logistics, transportation, HVAC, manufacturing energy), commodity input prices (oil-derived chemicals, plastics, fertilisers, synthetic materials), and logistics disruption (longer routes, higher freight rates, tighter container availability).
For these companies, the materiality question is whether oil at $75 to $79 per barrel, versus whatever the company's Q2 budgeting assumption was, creates a material impact. Companies that hedged fuel costs through Q2 may have limited current exposure but face future exposure if hedges expire. Companies that did not hedge have direct current exposure.
The K&L Gates 2026 reporting season guidance is explicit: even where the impacts of a specific geopolitical event are not currently material, companies should monitor and disclose the risk of future volatility if there is a reasonable basis to expect material impact. That standard applies here. A company that uses significant quantities of oil-derived materials should assess and, where material, disclose the expected impact of sustained oil prices at current levels.
Domestic-only companies: what you still need to assess.
A company with entirely domestic operations, no international supply chain, and no fuel cost sensitivity might appear to have nothing to disclose. But the assessment must still be made and documented.
The specific question to answer is: does the company have any exposure to oil prices, even indirectly, through domestic transportation costs, energy costs for facilities, or domestic suppliers who in turn have upstream energy cost exposure? If the answer is genuinely no, document the assessment. If the answer is yes to any degree, assess materiality.
The SEC staff has in prior comment letters flagged domestic companies that described macroeconomic risks generically without assessing their specific exposure. The same standard applies here. Not disclosing because the risk is immaterial is acceptable. Not disclosing without having assessed materiality is not.
What Does "Materially Affected or Reasonably Likely to Materially Affect" Mean Under Item 303 in This Context?
Item 303 of Regulation S-K requires MD&A to discuss factors that materially affected results in the period covered by the report, and factors that management reasonably expects will have a material effect on future results.
In the geopolitical escalation context, both prongs are potentially triggered.
The backward-looking prong covers Q2 2026 (April 1 through June 30). Oil price movements occurred throughout Q2 as the Iran conflict escalated and the June ceasefire was negotiated. A company with material fuel or commodity cost exposure that was not addressed in the results of operations discussion for Q2 on the grounds that the ceasefire made it temporary should revisit that conclusion. The ceasefire was terminated today.
The forward-looking prong covers the period after June 30. The Q2 10-Q is filed in August. As of the filing date, the situation is: the ceasefire has been declared over, active strikes are underway, the Strait is operationally restricted, and oil is at a materially higher level than it was at the start of the year. If fuel or commodity costs at current or near-current levels would materially affect the company's H2 2026 results or full-year 2026 outlook, that is a known uncertainty that must be disclosed under Item 303.
The standard is management's reasonable expectation, not certainty. The SEC staff has consistently stated that the forward-looking standard requires disclosure when management is aware of a trend or uncertainty and there is a reasonable expectation it will have a material effect. Today's events clear that bar for any company with meaningful oil price or Strait-related supply chain exposure.
What Oil Price Surge Disclosure Looks Like: Quantifying the Impact on COGS, Margins, and Logistics Costs
Quantification is what the SEC staff expects. A disclosure that says "oil prices have increased due to geopolitical instability in the Middle East, which could affect our costs" is generic and does not satisfy Item 303. The staff expects the company to describe how much, for what specific cost category, and what the estimated impact is.
The relevant data points for Q2 2026 oil price disclosure:
WTI crude entered Q2 2026 at approximately $61-62 per barrel (based on the market context of the mid-June ceasefire lowering prices). Today it stands at approximately $75. That is a approximately $13 per barrel move, representing roughly a 20% increase from earlier Q2 levels. On today's news alone, crude moved more than 6%.
The specific disclosure format the SEC staff has consistently expected for energy-sensitive costs follows the same Item 303 quantification standard applied to tariffs, FX, and other cost drivers: name the cost category, state the period-over-period or within-period change in the cost driver, and attribute the estimated dollar or basis point impact to that driver.
For a company spending $500 million per year on logistics and transportation, a sustained 20% increase in fuel prices represents approximately $15 million to $25 million in annual incremental logistics cost exposure, depending on the fuel intensity of the company's distribution network. That figure, or a version of it specific to the company's actual data, is the quantified disclosure the Q2 10-Q MD&A should contain if oil price exposure is material.
For companies with commodity inputs that are oil-derived (plastics, packaging, fertilisers, synthetic textiles), the mapping from crude price to input cost is less direct but still estimable from the company's actual supplier contracts and historical price relationships. The disclosure should describe the approximate lag between crude price movements and input cost changes, and the estimated impact if current crude prices are sustained.
How Today's Iranian Sanctions Waiver Revocation Affects Your Disclosure Even If You Don't Trade With Iran
The US revoked Iran's oil sanctions waiver on Tuesday, a key concession from the June MOU. This has two potential disclosure implications that apply even to companies with no direct Iran trade.
First, the waiver revocation affects global oil supply availability. Iran had been exporting meaningful volumes of oil under the MOU. The revocation of the waiver removes that supply from the market, contributing to today's oil price spike. For companies with oil price exposure, the supply reduction from Iranian sanctions is one of the structural drivers of higher prices going forward, and it belongs in the known trends discussion even for companies that never bought Iranian oil.
Second, any company that uses Iranian suppliers, partners, or counterparties in any way, even indirectly through third-party intermediaries, faces a renewed sanctions compliance review. The US sanctions on Iran are among the most comprehensive in US law, and the revocation of the waiver returns the sanctions regime to its pre-MOU structure. Companies that had begun to consider supply chain relationships involving Iranian-origin goods should assess whether any such relationships were initiated in reliance on the waiver and whether they need to be unwound.
For most companies, the direct sanctions compliance angle is minimal if they had no Iran-linked supply chain activity. But the disclosure obligation around the supply impact on oil prices is real and broadly applicable.
What "Known Trends or Uncertainties" Must You Disclose Under Item 303 When Ceasefire Talks Have Collapsed?
Item 303(b)(2)(ii) requires disclosure of any known trends or uncertainties that have had or that the company reasonably expects will have a material favourable or unfavourable impact on net sales or revenues or income from continuing operations.
Three specific trends or uncertainties are now known as of this morning that were not fully formed as of the Q1 10-Q filing:
Trend 1: Sustained elevated oil prices. The ceasefire collapse and active Strait disruption create a basis for management to expect oil prices to remain elevated through at least Q3 2026, barring a rapid diplomatic resolution. The G7 and NATO declarations at the summit call for freedom of navigation in the Strait but provide no immediate mechanism to restore it. If management expects oil prices to remain at or near current levels through Q3, that expectation is a known trend that, if material, must be disclosed.
Trend 2: Higher shipping costs and longer logistics routes. The IMO's guidance to avoid Strait transit means ships are already rerouting. The Cape of Good Hope route from the Gulf to Europe and the US East Coast adds approximately 10 to 14 days to voyage time and 40% or more to voyage cost. If the company relies on goods transiting from the Gulf region, the expected increase in logistics costs and lead times is a known uncertainty.
Trend 3: Customer demand uncertainty in energy-exposed sectors. For companies whose customers are in energy-intensive industries, sustained high oil prices create demand uncertainty. Industrial customers may slow capital expenditure. Consumer demand for energy-intensive goods may shift. If the company's revenue is materially sensitive to customer demand in oil-exposed sectors, the forward-looking uncertainty is a known trend for disclosure.
The standard does not require management to predict outcomes it cannot predict. It requires management to disclose what it knows and the uncertainties it is aware of. Today's events are not speculative future risks for companies with material oil or logistics exposure. They are current operational realities, with the forward trajectory uncertain but reasonably expected to be materially impactful if the conflict continues.
A Sample Q2 2026 Strait of Hormuz Risk Factor Update
The following is a structural framework, not a verbatim template. Every company's risk factor must reflect its specific exposure, geography, and material facts.
Geopolitical Instability in the Middle East and Strait of Hormuz Disruption [Updated Q2 2026]
On July 8, 2026, President Trump declared the interim US-Iran Memorandum of Understanding, signed June 17, 2026, to be "over" following renewed military exchanges between US and Iranian forces and Iranian attacks on three commercial vessels transiting the Strait of Hormuz. The US revoked oil sanctions waivers previously granted to Iran under the MOU on July 7, 2026. The International Maritime Organization recommended on July 8, 2026, that all ship owners halt transit through the Strait pending improved security conditions.
The Strait of Hormuz is the world's most critical oil and natural gas shipping chokepoint, through which approximately 20% of globally traded oil passes in normal conditions. Disruption to transit through the Strait affects global oil prices, international shipping capacity, and the cost and availability of oil-derived commodities.
[Company-specific language: Our operations are affected by these conditions through [describe specific exposure: fuel costs, commodity inputs, logistics costs, customer demand in affected sectors, or other relevant channel]. In Q2 2026, we estimate that [if quantifiable: the oil price movement in Q2 affected our [COGS/logistics costs/etc.] by approximately $[X] million, representing approximately [Y] basis points of gross margin compression].
We cannot predict the duration or escalation of current hostilities, the timeline for reopening the Strait to full commercial transit, or future oil price levels. If current conditions persist or worsen, our [costs/revenues/supply chain] could be materially adversely affected. We are currently [describe mitigation: managing this risk through [hedging/alternative sourcing/pricing adjustments/rerouting/other], but we cannot assure that these measures will fully offset the impact.]
This framework follows the structure the SEC staff expects: current facts, specific exposure, quantification where available, forward-looking uncertainty, and mitigation description. The company-specific elements are where the work of actual risk factor drafting occurs.
Frequently Asked Questions
Does the Iran ceasefire collapse require a new risk factor in my Q2 2026 10-Q?
It requires a materiality assessment. If your company has material exposure to oil prices, international shipping costs, Gulf region supply chains, or oil-derived commodity inputs, today's events represent a material development in an existing risk that should be reflected in your Q2 risk factors. If your company added an Iran or Strait of Hormuz risk factor in Q1 2026, that disclosure must be updated to reflect the current status of the MOU and the nature of today's events. If you did not add one in Q1 but the escalation creates a material risk for your company, a new risk factor may be required.
What if my company has no direct Middle East exposure? Do I still need to disclose?
You still need to conduct and document the assessment. If your company has any oil price, fuel cost, or logistics cost sensitivity, even domestically, today's events are potentially relevant because they affect domestic fuel prices through global crude price movements. If the assessment concludes the exposure is immaterial, document that conclusion in your disclosure committee file. If you cannot demonstrate that the assessment was made, the absence of disclosure is harder to defend in a comment letter.
Is oil price volatility alone enough to trigger a required MD&A disclosure?
Yes, if the oil price impact is material to the company's results or future results. A 6%+ single-day move in crude prices, in the context of an active Strait of Hormuz disruption, is the type of known trend or uncertainty that Item 303 requires to be disclosed where material. The company must assess whether oil prices at current levels would materially affect H2 2026 results. If yes, the known trends section of the MD&A must address it.
What did SEC comment letters say about geopolitical risk disclosures in 2025?
The SEC staff's comment letter practice on geopolitical risk disclosures follows the same specificity standard applied to tariff disclosures and other macroeconomic factors: generic language naming a geopolitical risk without tying it to the company's specific exposure and quantifying the impact does not satisfy Item 303 or Item 105. The staff expects disclosures that describe how this specific company is affected, in what magnitude, and what management is doing about it.
What is the difference between a risk factor update and a subsequent event disclosure for geopolitical events?
A risk factor update describes material risks facing the company going forward, updated to reflect current facts. A subsequent event disclosure under ASC 855 covers events that occur after the balance sheet date (June 30, 2026) and before the financial statements are issued that provide evidence of conditions that existed at the balance sheet date, or events that do not provide such evidence but are of such significance that non-disclosure would make the financial statements misleading. Today's escalation is a subsequent event relative to the June 30 balance sheet. If the oil price movement or logistics cost impact from today's events is material and not already reflected in the financial statements, ASC 855 subsequent event disclosure may also be required in the Q2 financial statement footnotes, in addition to the risk factor and MD&A updates.
Key Takeaways
- On July 8, 2026, President Trump declared the US-Iran Memorandum of Understanding "over" at the NATO summit in Ankara following Iranian attacks on three commercial vessels in the Strait of Hormuz and US strikes on more than 80 Iranian targets. Oil surged more than 6% on the news.
- Every company that added an Iran or Strait of Hormuz risk factor in its Q1 2026 10-Q now has a stale disclosure that must be updated for Q2. Risk factors must accurately describe current conditions, and current conditions have materially changed.
- Companies without Q1 Strait of Hormuz disclosures must conduct and document a materiality assessment of their oil price, logistics, and commodity input exposure. If exposure is material, disclosure is required. If not material, the assessment must still be documented.
- Disclosure belongs in three locations: the risk factor section (updated for current facts), the results of operations MD&A (if Q2 results were materially affected), and the known trends section of MD&A (if future results are reasonably expected to be materially affected).
- The materiality assessment applies to three tiers of exposure: direct (energy, shipping, chemicals, refining), indirect (fuel costs, logistics, oil-derived inputs), and domestic-only (which still requires an assessment even if the conclusion is immaterial).
- Quantification is required where the impact is material. Name the cost category, state the change in the cost driver (crude up approximately 20% from earlier Q2 levels, more than 6% today alone), and attribute the estimated dollar or basis point impact.
- The US revocation of Iran's oil sanctions waiver on July 7 removed Iranian supply from the market, contributing to the price spike. Even companies with no direct Iran exposure should consider the supply effect in their known trends oil price discussion.
- Today's escalation may also be a material subsequent event under ASC 855 if it is of such significance that non-disclosure would make the Q2 financial statements misleading. Consult with your auditor on whether ASC 855 footnote disclosure is required in addition to the MD&A and risk factor updates.
- Q2 10-Q deadlines are August 11 for large accelerated and accelerated filers, and August 14 for non-accelerated filers. The disclosure must be complete and accurate as of the filing date, not as of June 30.
