The recent agreement to end the Iran war and reopen the Strait of Hormuz, a critical global oil transit route, will not immediately alleviate high oil and gasoline prices or energy supply shortages. Experts warn that it could take months for energy companies to resume normal operations and meet global demand due to logistical and security challenges.
The Strait of Hormuz, which typically handles about 20% of the world’s oil supply, has been closed for over three months, stranding ships loaded with crude oil in the Persian Gulf. Daniel Evans, global head of fuels and refining research at S&P Global Energy, emphasized the time required for insurance and safety assurances before operations can resume. '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,' he said.
The process involves evacuating stranded ships, reloading new tankers, and ensuring safe transit routes. Additionally, oil producers in the Middle East who paused extraction due to storage shortages face delays in restarting operations. Alan Gelder of Wood Mackenzie noted that countries like Saudi Arabia and the United Arab Emirates may recover faster due to alternate pipelines, while Iraq could take up to a year to resume full production.
'We don’t know what open means or what the speed of evacuation of trapped material is going to be,' said Daniel Sternoff, senior fellow at Columbia University’s Center on Global Energy Policy.
Investment in the energy system, which halted during the Strait’s closure, will also require time to restart. Producers are unlikely to resume operations until they have confidence in a stable, durable ceasefire and secure transit through the Strait of Hormuz.