The provisional agreement to reopen the Strait of Hormuz and end the war in Iran sent oil prices lower Monday, but analysts warned it will take weeks or even months for global energy flows to return to pre-war levels. The Associated Press reported that while the deal appears to be good news for the world economy, many questions remain about when and how oil will again move through the world’s most vital energy shipping lane.
Before the war, the narrow waterway between Iran and Oman carried about one-fifth of the world’s crude oil. During the months of conflict, hundreds of vessels became trapped in the Persian Gulf, unable to pass through the strait. Reopening the passage will require time to clear that backlog, analysts said. Oil-producing countries in the region that sharply cut output during the war also need time to restart pumping operations and restore the flow of fuel to market.
Beyond the logistical challenges, analysts pointed to a separate factor that could slow the recovery: the caution of tanker captains and shipping companies. Even if the strait is officially declared safe, operators may wait days or weeks to confirm that the threat of Iranian attack has genuinely diminished before ordering vessels to transit. That hesitation could further extend the timeline for normalizing flows.
Oil prices fell on Monday in response to the announcement of the provisional deal, but analysts said prices, inflation, and energy flows will not return immediately to where they stood before the conflict. The agreement is scheduled to be signed Friday, assuming it holds. Even after the signing, the Associated Press reported, full restoration of the region’s oil trade will take “weeks or even months.”