Even with the reopening of the Strait of Hormuz, global oil prices are unlikely to immediately revert to their pre-conflict levels. Experts anticipate that a full return to prior price points could take up to six months following the strait’s reopening, highlighting the complex dynamics of the international energy market.
This assessment follows a period of volatility where Iran had briefly opened the vital shipping lane after a ceasefire agreement in Lebanon, only for the Iranian military to close it again on Saturday, April 18. Such intermittent closures underscore the geopolitical sensitivities influencing global energy supply chains.
Energy observer Tumbur Parlindungan, speaking to kumparan on Sunday, April 19, emphasized that while oil prices could indeed fall, an immediate return to original levels is improbable. “Due to the closure of the Strait of Hormuz, the world has experienced a significant supply shortage. Prices may only return to their pre-war state once supply and demand equilibrium is fully restored,” Parlindungan stated, adding that the precise timeframe, potentially up to six months or even sooner, would depend heavily on global demand.
Parlindungan further elaborated on the ripple effect on global fuel prices. He noted that changes in global oil prices would swiftly translate into adjustments at the pump. A sustained decrease in global fuel prices would, in turn, be instrumental in curbing inflation in affected countries. Countries such as Canada and the United States typically see these global oil price fluctuations reflected in domestic fuel costs within a matter of days.
The expert underscored the profound economic implications, stating, “The impact of expensive fuel prices significantly fuels inflation within a country. Every nation is striving to contain inflation, which can then allow for a corresponding decrease in bank interest rates.” This illustrates the critical link between energy costs and broader economic stability.
Concurring with this view, fellow energy observer Bisman Bachtiar also predicted that global oil prices would not instantly plummet if the Strait of Hormuz were to reopen, as markets would remain cautious, closely monitoring the evolving situation. “Prices cannot immediately return to their initial pre-conflict levels. While the opening of the Strait of Hormuz will undoubtedly alleviate risk pressure in the global oil market, prices won’t normalize instantly because market participants will be waiting for sustained stability,” Bisman explained.
Should the reopening of the Strait of Hormuz proceed without further disruptions like a swift re-closure, price normalization would still require time. Bisman estimated this process could take anywhere from two weeks to two months. He also highlighted that the trickle-down effect of falling crude oil prices to reduced global fuel prices also operates on a delayed timeline.
Explaining this lag, Bisman noted, “A reduction in fuel prices takes time and cannot be as rapid as changes in crude oil prices due to the inherent delays in refining processes, distribution networks, and the specific policies of each country. Typically, it takes around a month, or possibly longer, for consumers to see a drop in fuel prices.”
The sensitivity of the market to the Strait of Hormuz was recently demonstrated when global oil prices temporarily fell by up to 9 percent during Iran’s brief opening of the strait, even though it was quickly re-closed on Sunday, April 19. During this short window, Brent crude futures plunged by $9.01, or 9.07 percent, settling at $90.38 per barrel. Similarly, U.S. West Texas Intermediate (WTI) crude futures saw a significant drop of $10.48, or 11.45 percent, reaching $83.85 per barrel.