The US and Iran seemed to be making progress on Monday towards a deal that could reopen the Strait of Hormuz after three months of oil and gas flows being reduced to a trickle. Though stockpiles and other measures have partly offset the squeeze so far, JPMorgan had warned that, at current drawdown rates, without a deal commercial oil stocks could reach critically low levels by June. Yet even if the strait reopens, energy flows will take months to normalise, and governments will still face tricky trade-offs and the potential need to impose curbs on fuel demand.
Whenever it starts to reopen, resuming supplies through the strait is not a case of flicking a switch. With no export ability, many oilfields were fully “shut in”; S&P Global estimates that some could take seven months to restart. Some resumed oil flows will have to go into rebuilding reserves. Some liquefied natural gas facilities, meanwhile, have been damaged and need repairing.
Roughly 2,000 ships stranded in the Gulf will need to reposition and offload cargoes. Sultan al-Jaber, CEO of the Abu Dhabi National Oil Company, has said it will take at least four months for traffic volumes through the strait to recover to 80 per cent of prewar levels, with full normalisation hard before the first half of 2027. Demining will take months.