As the Iran war approaches its 100th day, a prevalent but flawed assumption has taken root among policymakers, businesses, and investors: that a swift reopening of the Strait of Hormuz will rapidly deflate energy prices as stranded oil and gas tankers finally exit the Gulf. However, top oil executives, shipping sector leaders, and economists are presenting a starkly different outlook, cautioning that peace will not instantly restore normalcy to energy markets and global supply chains. The repercussions, they assert, could endure for many more months, and potentially years.
Amin Nasser, CEO of Saudi Aramco, the Gulf’s largest oil supplier, informed investors last month that even an immediate reopening of Hormuz would necessitate “months for the market to rebalance.” Should the closure persist for just a few additional weeks, Nasser projected that “normalization will last into 2027.” Traffic through the critical waterway between Iran and Oman remains significantly below normal levels, despite a fragile ceasefire and ongoing peace talks marred by repeated setbacks. Oil prices hover approximately 30% above pre-war levels, sustaining elevated costs for gasoline, diesel, and fertilizer. These increased expenses are fueling global inflation, disrupting supply chains, and driving up food prices worldwide as natural gas-derived fertilizer becomes more expensive for farmers.
Navigating a Perilous Strait
Once a peace deal is brokered, shipping firms must first rebuild sufficient confidence to redeploy crews to the Gulf region, a process experts suggest could require an observation period of 30 to 45 days. Robust security arrangements, including international navy patrols, will also be essential to safeguard against any sporadic attacks on vessels. Shipowners and crews remain profoundly cautious, as strikes on shipping in Hormuz persist, with multiple vessels reportedly hit just last week, as Chevron CEO Mike Wirth told Bloomberg. Wirth indicated that reopening Hormuz would likely be a “stop and start” endeavor.
Neil Crosby, head of research at market intelligence firm Sparta Commodities, emphasized to DW that “It only takes one attack on a ship to put the vast majority of them off.” He added that shipping firms have already offset Gulf revenues with other voyages, questioning “why bother taking the risk?” Lloyd’s of London, the world’s leading marine insurance market, has observed war-risk premiums for Hormuz transits surge dramatically and remain elevated even after the ceasefire, which took effect on April 8. Once Hormuz is deemed safe, the numerous tankers already trapped within the Gulf will require secure passage to exit, while fresh vessels must sail from distant ports—some halfway across the globe—to load new cargoes. Crosby warned that “The process might take eight weeks, perhaps longer, depending on how long each step takes.”
Damaged Infrastructure, Lingering Scars
Physical damage to Gulf energy infrastructure presents another significant source of delay. Dozens of oil fields, pipelines, refineries, and liquefied natural gas (LNG) plants have sustained hits, with repair costs estimated in April to range between $25 billion and $58 billion, according to consulting firm Rystad Energy. The most severely impacted is Qatar’s colossal Ras Laffan complex, where Iranian strikes incapacitated 17% of the country’s LNG capacity. Qatari officials have cautioned that comprehensive repairs there could span three to five years.
LNG producers could also face years of disentangling complex contractual disputes over missed deliveries, with backlogs potentially affecting cargo schedules well into 2027, according to lawyers speaking to S&P Global’s Platts, a prominent energy and commodity price benchmark provider. This includes contested “force majeure” claims, legal declarations asserting that the war rendered LNG delivery impossible as promised. Other energy facilities face weeks or months of work due to the necessity for thorough safety checks, complications arising from prolonged production halts, and the procurement of replacement parts that were already in short supply pre-war. Gulf sites that have been offline since March have accumulated pressure, debris, and potential corrosion, necessitating meticulous inspections and careful restarts to avert accidents.
Dwindling Buffers and a Looming “Red Zone”
Crosby highlighted an “inventory problem” that could materialize by summer, noting how other segments of the global oil market have provided temporary relief for the lack of supply from the Gulf. Since the war’s onset, the United States has escalated oil production to record volumes, while China has reduced its crude imports by 3.5 million barrels per day, relying more heavily on strategic reserves. Members of the International Energy Agency (IEA) have also drawn from their oil reserves. However, these temporary measures are unsustainable.
US oil stocks are projected to reach perilously low levels in the coming months, while China will soon need to resume imports, intensifying competition with the rest of the world for limited supplies. Fatih Birol, head of the IEA, warned last month that while a pre-war oil surplus helped absorb the initial shock, the oil market could enter a “red zone” in July or August due to depleting stocks. Crosby told DW, “Once they [oil stocks] start to run dry, the only solution is higher prices because only with higher prices can you start to really destroy demand.” He hinted at prices potentially doubling, a trajectory he warned would inevitably lead to a global recession.
The confluence of persistent security risks, extensive infrastructure damage, and rapidly diminishing global energy reserves indicates that the path to market rebalancing will be protracted and fraught with challenges. Even a cessation of hostilities will not offer an immediate reprieve from the energy crunch, instead ushering in a complex, multi-year recovery period with significant implications for global economic stability.
