What happens when the war really ends
What happens when the war really ends
What happens when the war really – President Donald Trump declared on Saturday that peace with Iran is within reach and that the Strait of Hormuz will soon be fully open to maritime traffic. However, the market remains cautious, having grown accustomed to the president’s habit of announcing peace before the final details are settled. Over the last three months, Trump has repeatedly hinted at a resolution, yet each time, the situation has shifted, leaving traders skeptical of immediate progress.
The Delicate Balance of the Strait
Iran has long maintained its position as the key player in controlling access to the Strait of Hormuz, a vital chokepoint for global oil exports. Throughout the conflict, the country used a combination of tactics—speed boats, mines, and advanced drones—to disrupt shipping, effectively holding the world’s economy hostage by limiting tanker movement. This has resulted in a significant reduction of oil supply, with around 170 million barrels of crude being trapped in the Persian Gulf, according to Matt Smith, lead oil analyst at Kpler.
“The number of tankers stuck in the region is substantial, and their release will take considerable time,” Smith noted. “This is because the logistical process is slow, and the market is now more focused on concrete outcomes rather than Trump’s frequent announcements.”
While Iran’s actions have caused temporary shortages and price spikes, the question remains: How long will it take for the market to stabilize once the strait is reopened? Analysts suggest that even if the conflict ends and the strait resumes normal operations, the path to normalcy will be complex and prolonged. The first hurdle is clearing the backlog of tankers, a task that could extend well into the coming weeks.
The Timeline of Recovery
Victoria Grabenwöger, a senior oil analyst at Kpler, estimates that restoring full tanker transit capacity might require up to three months. This timeline hinges on the gradual movement of the 166 or so vessels currently stalled in the Persian Gulf. As these tankers exit, they will be replaced by empty ones, which will then load oil and return to global markets. Yet, this process is far from immediate, given the slow pace of maritime operations.
Once the strait is open, the next phase involves reducing oil stockpiles that have accumulated due to the disruption. Producers had stocked up heavily in anticipation of supply cuts, but refineries were more flexible, only partially filling their reserves. This should ease the pressure on restarting production, but the surplus still requires careful management to avoid delays in restoring normal flow.
“The extent of the stockpile buildup is a factor that cannot be ignored,” Grabenwöger explained. “Even with partial storage levels, the process of rebooting operations will take time, especially with the need to coordinate across multiple producers and countries.”
Restarting oil production itself is a multi-step process. During the conflict, many Middle Eastern oil wells were temporarily shut down, leading to a loss of approximately 12 million barrels per day of crude output. Refiners and producers alike have faced challenges in resuming operations, as the physical and logistical demands of restarting wells are considerable. Engineers must recalibrate reservoir pressures, ensuring they do not collapse, which could necessitate re-drilling and extensive repairs.
The Cost of Conflict
The war has left a trail of damage across the region, with critical infrastructure such as refineries, gas terminals, and oil platforms suffering from attacks and sabotage. Some of these facilities may require years of investment and effort to fully restore, according to industry experts. The Middle East, particularly Saudi Arabia and Iraq, has been hit hardest, with millions of barrels of refined products also halted.
Shipping companies, too, face an uphill battle. The previous brief reopening of the strait saw vessels rush to evacuate, only to halt operations when safety concerns resurfaced. Insurance premiums for maritime coverage have surged dramatically, and companies may hesitate to commit to transit until the threat of attacks is mitigated. This uncertainty could prolong the period of high prices, even if the strait reopens.
The Unwritten Terms of Peace
While the promise of peace is enticing, the details of the agreement remain unclear. Iran’s willingness to fully reopen the strait may depend on whether it can secure concessions from the United States and Israel. For instance, will the administration lift its blockade on Iranian oil as a condition for peace? Or will it demand assurances that Iran will no longer block shipments, potentially altering the balance of power in the region?
There is also the question of Iran’s continued use of the strait as leverage. If the country decides to charge tolls for passage or enforce restrictions, it could maintain influence over oil prices despite the official end of hostilities. Traders are watching closely, aware that even a temporary resolution could lead to new complications if Iran’s demands are not met.
A Test of Trust and Timing
The next few weeks will be pivotal in determining whether the current peace talk translates into lasting stability. If Iran genuinely commits to allowing unrestricted transit, the market may begin to relax its grip on prices. However, if the country continues to test the waters, oil prices could remain elevated for an extended period.
Analysts caution that the process of recovery is not linear. Even with the strait open, the coordination required to restart production and rebuild stockpiles could take months. The global economy, already strained by supply disruptions, may need patience as the oil supply chain reassembles. As Grabenwöger emphasized, “The assumption that peace means instant relief is a dangerous one. There are still many pieces to the puzzle that need to fall into place.”
With the war’s end still uncertain, the market continues to monitor developments. Each new development—whether it’s a renewed attack, a stalled agreement, or a successful reconciliation—could shift the trajectory of oil prices. For now, the world remains in a holding pattern, waiting for the final confirmation that the Strait of Hormuz will truly become a free pass for global trade.