Energy experts say oil supplies will need months to normalize after Iran cease-fire deal
Analysts warn that despite the recent U.S.–Iran agreement to end hostilities and reopen the Strait of Hormuz, oil shipments and refinery operations are likely to remain disrupted for several months.
New York – The United States and Iran announced an agreement on Sunday to end the conflict and reopen the Strait of Hormuz, but experts say the impact on global oil markets will not be immediate. Shipping companies have had vessels stranded in the Persian Gulf for more than three months, and insurers and operators are expected to take time to restore confidence in the waterway, delaying the resumption of normal crude flows.
"It’s going to take time for people to feel comfortable and for insurance to be in place ... particularly to get people on the ground to restart some of these assets," said Daniel Evans, global head of fuels and refining research at S&P Global Energy.
Oil prices fell modestly after the announcement, with Brent crude trading at $83.89 a barrel and U.S. West Texas Intermediate at $80.85, still above pre-war levels near $70. Evans noted that even after the strait reopens, tankers must wait for a safe window to enter, load, and exit, and the transit itself can take months before oil reaches distant refineries.
Some Middle-Eastern producers halted output when storage filled, a process that can be slow to reverse. Alan Gelder, senior vice president at Wood Mackenzie, said Saudi Arabia and the United Arab Emirates may restart more quickly because of alternative routes, while Iraq could face a year-long delay due to larger shut-ins.
"Countries that shut in oil production won’t want to restart until they know there is a stable, durable strait, and that a ceasefire will last more than 30 or 60 days," said Daniel Sternoff, senior fellow at Columbia University’s Center on Global Energy Policy.
The analysts conclude that while the cease-fire deal removes a major geopolitical risk, the logistics of moving, refining and delivering oil mean the market will remain constrained for months.
