A ceasefire between the U.S. and Iran is unlikely to quickly restore the oil market, as restarting oil fields and repairing facilities will take months, while fixing Qatar's LNG export facilities could require years. Although oil prices have retreated, they remain higher than pre-war levels, suggesting that high prices and supply shortages may persist.
According to AXIOS, there is no quick or easy solution to this historically severe oil market disruption—meaning major oil-importing nations will continue to face high prices and supply constraints.
Following the ceasefire agreement, a key point of observation is whether it provides enough certainty for tanker operators to resume large-scale transport of crude oil, refined products, and other commodities through the Strait of Hormuz.
"Confidence-building measures in the coming days will be crucial to restoring shipping," said Joseph Brusuelas, Chief Economist at RSM US, in an interview.
He pointed out that tanker insurance must be reinstated, which requires clarity on the specific conditions Iran may impose—conditions that remain unclear at present.
In a statement, Iranian Foreign Minister Abbas Araghchi said that, through coordination with Iran’s armed forces and taking technical limitations into account, safe passage may be possible within the next two weeks.
The implication is that, even aside from what these "technical limitations" specifically refer to, oil supply cannot simply return to pre-war conditions.
"Restarting idled facilities and shuttered oil fields could take weeks to months," wrote U.S. energy research and consulting firm ClearView Energy Partners in a report.
Therefore, even if prices at the pump decline slightly, it is not a cause for excessive optimism—this does not mean a full return to normal.
"I expect shipowners and operating companies, some in coordination with government representatives, to seek clear approval from Tehran before resuming operations," said Clayton Seigle, an oil analyst at the Center for Strategic and International Studies.
In an email, he added, "We will monitor ship-tracking platforms and news reports on tanker movements to determine whether they have received passage approval."
Another challenge is that during the conflict, oil-producing nations in the Persian Gulf have cut production by millions of barrels per day due to blocked export routes.
"Restarting production itself is a significant engineering challenge," Brusuelas noted.
In addition, multiple oil and refining facilities in producing countries were damaged during the war. He predicted that it would take three to six months for regional crude output and refining capacity to fully recover to pre-war levels.
In the natural gas sector, damage to Qatar’s liquefied natural gas export facilities could take years to fully repair.
Following the ceasefire announcement and the U.S. stepping back from large-scale strike threats, the U.S. benchmark crude price fell by approximately 14% as of the reporting deadline, though it remains well above pre-war levels.
All eyes will now be on progress in peace talks between the U.S. and Iran during the two-week ceasefire period.
Analysts at Jefferies noted on Tuesday evening that although the risk of renewed escalation—leading to further energy supply disruptions and price spikes—remains, "uncertainty has likely peaked."
The firm stated, "Oil prices are likely to stay above pre-war levels in the coming months, but further upside appears limited."
Several Asian countries heavily reliant on oil and gas shipments through the Strait of Hormuz have been forced to implement emergency fuel-saving measures. Even if shipping resumes immediately, it will take days to weeks for new shipments to reach these nations.
In the United States, data from the American Automobile Association shows the current national average for regular gasoline is $4.14 per gallon, the highest level since 2022.
Following the ceasefire announcement, Patrick De Haan, Head of Petroleum Analysis at GasBuddy, stated on platform X that the national average could fall below $4 within one to two weeks.
Comments