Even If the Strait of Hormuz Reopens, It’s Not Over... Oil Prices and Shipping May Take Months to Normalize

US-Iran Peace Talks Near Conclusion... Oil Prices Drop for Now
Mine Clearance and Resumption of Shipping Remain Variables... "Full Normalization May Not Happen Until Next Year"

As peace negotiations between the United States and Iran are nearing their conclusion, expectations are rising for the reopening of the Strait of Hormuz. However, there are projections that it will take considerable time for actual normalization of shipping operations and stabilization of international oil prices.

According to the New York Times (NYT), the Wall Street Journal (WSJ), and other sources on May 24 (local time), U.S. officials stated that a principled agreement has been reached for Iran to reopen the Strait of Hormuz. The Strait of Hormuz is a critical passageway through which about 20% of the world's oil and natural gas supply passes.

Reflecting these expectations for an agreement, international oil prices fell on this day. West Texas Intermediate (WTI) crude futures dropped by about 4.8%, Brent crude futures fell by 4.3%, and major U.S. stock index futures also rose.

However, market participants believe that even if the strait is officially reopened, it will take time to achieve full normalization. Currently, it is reported that around 1,500 to 2,000 vessels are stranded in the Persian Gulf. While some ships have started moving, shipping companies remain cautious about resuming normal operations until safety is assured.

In particular, mine clearance operations—due to mines believed to have been installed by Iran—are considered a key variable. The International Energy Agency (IEA) has analyzed that it could take several weeks for the United States and its allies to deploy mine-clearing equipment and warships. Additional safety requirements from insurance companies and issues surrounding vessel escort are also cited as factors that may increase logistics costs.

Sultan Al Jaber, CEO of Abu Dhabi National Oil Company (ADNOC), a state-owned energy company in the United Arab Emirates (UAE), stated, "It will take at least four months for the Strait of Hormuz's traffic volume to recover to 80% of pre-war levels," adding, "Full normalization may be difficult before the first half of next year."

Experts believe that instability in the crude oil supply chain will not be resolved in the short term. With declining inventories and damage to production facilities occurring simultaneously, it is possible that the stabilization of gasoline and other fuel prices will be further delayed. At the same time, the current situation is highlighting the vulnerability of the fossil fuel supply chain and is expected to influence countries' efforts to expand alternative energy sources.

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