Oil Markets Face Slow Recovery Despite Iran Peace Agreement and Hormuz Reopening

The agreement announced on Sunday to end the conflict involving Iran and reopen the Strait of Hormuz has raised hopes of relief for global energy markets, but industry experts say lower oil and gasoline prices are unlikely to be felt immediately.

Although the deal is expected to restore access to one of the world’s most important energy shipping routes, analysts warn that it could take months before oil supplies return to normal levels and reach global consumers.

The Strait of Hormuz, which traditionally handles around one-fifth of the world’s oil and fuel shipments, has been largely inaccessible for more than three months due to the conflict. During that period, numerous oil tankers remained stranded in the Arabian Gulf, unable to move safely through the narrow waterway.

Energy specialists say the reopening of the route marks only the beginning of a lengthy recovery process. Before fresh exports can resume at full scale, vessels already trapped in the region must first clear the strait. Only then can new tankers enter ports to load crude oil for international markets.

Daniel Evans, global head of fuels and refining research at S&P Global Energy, said restoring normal operations would depend heavily on confidence in the security situation and the availability of insurance coverage for shipping companies.

Industry observers note that the oil supply chain moves at a relatively slow pace. Once crude oil is loaded onto tankers, it can take weeks or even months to reach distant destinations. The oil must then be refined into products such as gasoline and diesel before being distributed to consumers.

The conflict also forced several Middle Eastern producers to suspend oil extraction after storage facilities reached capacity. Restarting those operations is expected to be gradual, particularly in countries that faced extended production shutdowns.

Analysts believe Saudi Arabia and the United Arab Emirates may recover more quickly than some regional producers because they possess alternative export routes and pipeline networks that reduce dependence on the Strait of Hormuz.

Other producers may face greater challenges. Alan Gelder, senior vice president of refining, chemicals and oil markets at Wood Mackenzie, said some countries experienced extensive production interruptions and could require significantly more time to restore output levels.

Investment in energy infrastructure also slowed during the disruption, creating another obstacle to a rapid recovery. Experts say companies are likely to wait for signs of lasting stability before committing substantial resources to restart projects and expand production.

Daniel Sternoff, senior fellow at Columbia University’s Center on Global Energy Policy, said energy producers will seek assurance that the ceasefire and reopening of the strait are durable before fully resuming operations.

While the agreement represents a major step toward restoring global energy flows, market analysts say consumers should not expect immediate declines in fuel prices as the industry works through logistical and operational challenges created by months of disruption.