Even with Sunday’s announcement of an agreement to end the conflict with Iran and reopen the Strait of Hormuz, elevated oil and gasoline prices, along with energy supply disruptions, are unlikely to ease immediately.
Energy experts say it could take several months for producers to restore operations enough to satisfy global demand. They noted that delays in crude transportation and refining, combined with continued concerns over the safety of navigating the strait, mean any impact is unlikely to be felt right away.
For more than three months, oil tankers carrying crude have remained stuck in the Persian Gulf due to security concerns preventing safe passage through the route, which normally handles around one-fifth of global oil and fuel shipments before the conflict erupted.
Daniel Evans, global head of fuels and refining research at S&P Global Energy, said it would take time for confidence to return and for insurance coverage to be restored before operations can fully restart. He added that getting workers back on site and bringing key energy assets back online would also be a gradual process.
Brent crude, the global benchmark, fell by $3.45 to $83.89 per barrel, while U.S. crude oil dropped $4.03 to $80.85 per barrel in early Monday trading following the announcement.
However, both benchmarks remain significantly higher than pre-war levels of about $70 per barrel before the conflict began.
Evans said that as prices ease, vessels that had been stuck in the strait would first need to clear out before fresh tankers could enter for loading operations.
“To bring a ship in, you need to be confident that you’ve got a big enough window of safety to bring it in, load it and move it out,” he added.
He also noted that oil tankers operate at a slow pace, adding that it can take several months for crude shipped through the strait to reach refineries abroad, be processed, and ultimately arrive at its final destination.
Some oil producers in the Middle East also halted production—known as a shut-in—after reaching storage limits. Restarting output from these facilities is often a gradual process that takes time to fully ramp up again.
The UAE and Saudi Arabia, which have alternative pipelines and export routes outside the Strait of Hormuz, are likely to resume oil production more quickly than other producers, according to Alan Gelder, a senior vice president for refining, chemicals and oil markets at Wood Mackenzie.
“But places like Iraq could be much more challenged because they’ve had a much bigger shut-in, their fields are more difficult … it may well take about a year before they get back,” he said.
Gelder said that investment in the energy sector—which typically takes years to yield returns—stalled following the closure of the strait, adding that it will take time for capital spending to restart and recover.
In a statement, Daniel Sternoff, a senior fellow at the Columbia University Center on Global Energy Policy, said countries that halted oil production would likely avoid restarting operations until there is confidence that the Strait of Hormuz is stable and that any ceasefire proves durable beyond a short-term period of 30 to 60 days.
“We don’t know what open means or what the speed of evacuation of trapped material is going to be,” he said.
