"War Is Over?" Oil Prices Remain Unmoved... The Real Threat Lies Elsewhere [Weekend Money]

Global Crude Oil Supply Disrupted by 10% Due to War
Considerable Time Needed to Normalize Halted Oil Fields
"Oil Prices Expected to Stabilize by 4Q"

A gasoline and diesel price notice is placed at a gas station in Yongsan-gu, Seoul, on the 3rd as international oil prices soar due to strong remarks by U.S. President Donald Trump. 2026.04.03 Photo by Dongju Yoon

Although international oil prices have somewhat stabilized following the ceasefire agreement between the United States and Iran, they have yet to return to pre-war levels. How the situation unfolds after the war has become even more critical at this point. Some analysts suggest that normalization of the crude oil supply chain may not occur until the fourth quarter of this year.

Post-war Supply Disruption Volume Estimated at 10%

As the United States and Iran paused their conflict, the price of West Texas Intermediate (WTI) futures, which had exceeded $100 per barrel, has dropped to the $90 range. Nevertheless, tensions between the U.S. and Iran persist, and only a handful of vessels have passed through the Strait of Hormuz even after the ceasefire agreement. However, what matters most in the market is sentiment. Even just the expectation that the Strait of Hormuz blockade will be lifted can be enough to lower oil prices.

Hana Securities analyzed the global crude oil supply and demand situation following the U.S.-Iran war and concluded that the volume of disrupted supply stands at about 10% of global crude oil demand. Saudi Arabia’s east-west pipeline can transport up to 7 million barrels per day. If the pipeline runs at full capacity, the amount of oil that can be exported from Yanbu, Saudi Arabia, is 5 million barrels per day. Currently, Saudi oil exports are nearing 4.7 million barrels a day, about 70% of pre-war levels. In the United Arab Emirates (UAE), the Fujairah pipeline—previously disrupted by Iranian drone strikes—resumed operations, increasing oil shipments to around 1.9 million barrels per day at the end of last month. The International Energy Agency (IEA)’s 400 million barrels of strategic petroleum reserves are being released depending on each country’s situation, but historical cases show that daily releases have never exceeded 2 million barrels. There are also temporarily sanction-relaxed volumes of Russian and Iranian seaborne crude.

Three Key Variables for Supply Normalization: "Recovery Expected by Q4"

The key issues going forward are how much oil prices can stabilize and how long it will take. Oil prices, based on WTI, have surged up to 78% compared to pre-war levels. The stabilization of oil prices depends more on the normalization of supply than the magnitude of this increase. During the first and second oil shocks in the 1970s, prolonged high oil prices resulted from OPEC’s embargo and ongoing supply disruptions caused by the Iran-Iraq war. In contrast, during the Gulf War in 1990, the Libyan civil war in 2011, and the Russia-Ukraine war in 2022, oil prices stabilized within about one to four months, thanks to early ends to hostilities, Saudi Arabia’s decision to boost production, the release of strategic reserves, and decreased demand.

Hana Securities cited three variables for crude oil supply normalization: ▲ securing safe passage through the Strait of Hormuz, ▲ the resumption of oil production by Middle Eastern oil-producing countries, and ▲ the pace of increased production among non-OPEC countries such as the United States. If Iran gains control over the Strait of Hormuz, transaction costs are expected to rise due to increased transit fees. Until complete maritime safety is guaranteed, there may also be a tendency among shippers to reroute their vessels.

Separate from stabilizing the Strait of Hormuz, crude oil production by Middle Eastern oil producers is not expected to normalize until the second half of this year. OPEC’s crude oil output in March has already dropped to 74% of the previous month’s level. Due to a lack of storage facilities, this month’s production is likely to fall even further. Oil fields operating at reduced capacity can ramp up production quickly, but in cases where operations have been suspended and must be restarted, it takes about two to three weeks for small oil fields and four to five weeks for large oil fields to resume. Since infrastructure damage from the war remains, it is expected that full production recovery will take over a month. However, increased oil production from non-OPEC countries such as the United States and Brazil could partially offset the impact.

Ultimately, due to ongoing crude oil supply disruptions, oil prices are expected to remain higher than pre-war levels, at around $80 to $90 per barrel (WTI basis) for the time being. Hana Securities researcher Jeon Kyuyoun explained, "OECD oil inventories are expected to decline until the third quarter of this year before rebounding," adding, "We expect international oil prices to stabilize back to pre-war levels around the fourth quarter of this year."

This content was produced with the assistance of AI translation services.