Oil Prices May Not Return to Pre-War Levels Until 2027, Even if Strait of Hormuz Reopens

Market analysts suggest that even if a ceasefire is reached and the Strait of Hormuz is reopened, oil prices may not return to pre-war levels until early to mid-2027. GasBuddy's head of petroleum analysis, Patrick De Haan, stated that while consumers could feel a slight decrease in gas prices within days of the strait reopening, a more substantial drop will take longer. He estimates that the first three months after reopening would eliminate one-third of the price increase, with another third eliminated in the following six months, but a full return to pre-war prices is projected for early to mid-2027. S&P Global Energy's chief fuels analyst, Rob Smith, noted that even if military conflict ends permanently, restoring shipping volume in the Strait of Hormuz to pre-war levels will take several months, and US gasoline prices are unlikely to return to pre-war levels before the end of the year. Rystad Energy reports that a phased reopening of the strait within 30 days would be an optimistic scenario, with meaningful volume recovery not expected until June at the earliest. Additionally, gas stations will need time to sell off existing high-priced inventory. A significant uncertainty remains regarding the future 'normal state' of the Strait of Hormuz, as Iran has demonstrated its capability to close the strait, and its military capabilities, though weakened, are not destroyed.