Even peace deal seen failing to quickly end energy crisis from Iran war
Top oil executives and shipping experts warn that reopening the Strait of Hormuz and repairing Gulf energy infrastructure could take months or years, even if a peace deal is reached. The warning comes as the Iran war approaches 100 days on Sunday, with oil prices still roughly 30% above pre-war levels and global supply chains under severe strain. The International Energy Agency has warned the oil market could enter a "red zone" in July or August as emergency buffers run dry.
Top oil executives and shipping experts warn that reopening the Strait of Hormuz and repairing Gulf energy infrastructure could take months or years, even if a peace deal is reached, as the Iran war approaches 100 days on Sunday.
Oil prices remain roughly 30% above pre-war levels, keeping gasoline, diesel and fertilizer prices significantly elevated. These additional costs are pushing up global inflation, disrupting supply chains and raising food prices worldwide.
Amin Nasser, CEO of Saudi Aramco, the Gulf's largest oil supplier, told investors last month that even if Hormuz reopened immediately, it would "take months for the market to rebalance." If the closure was sustained for even a few more weeks, Nasser said that "normalization will last into 2027."
Chevron CEO Mike Wirth told Bloomberg on May 29 that reopening Hormuz would likely be a "stop and start" process, noting that multiple vessels were hit in Hormuz last week alone. Shipowners and crews remain deeply cautious because strikes on shipping have continued despite a fragile ceasefire that took effect on April 8.
"It only takes one attack on a ship to put the vast majority of them off," Neil Crosby, head of research at market intelligence firm Sparta Commodities, told DW. Crosby added that shipping firms have replaced Gulf revenues from other voyages, so "why bother taking the risk?" He warned the process of reopening Hormuz "might take eight weeks, perhaps longer."
Physical damage to Gulf energy infrastructure will add another major delay. Repair costs for damaged facilities were estimated in April at between $25 billion and $58 billion by consulting firm Rystad Energy. The worst hit is Qatar's giant Ras Laffan complex, where Iranian strikes knocked out 17% of the country's LNG capacity. Qatari officials have warned full repairs could take three to five years to complete.
LNG producers could also face contractual disputes over missed deliveries with backlogs potentially affecting cargo schedules well into 2027, according to lawyers speaking to S&P Global Energy Platts. This includes contested "force majeure" claims — legal declarations that the war made it impossible to deliver LNG as promised.
International Energy Agency head Fatih Birol warned last month that while a surplus of oil before the war helped absorb the initial shock, the oil market could enter a "red zone" in July or August due to depleting stocks. Crosby told DW: "Once they [oil stocks] start to run dry, the only solution is higher prices because only with higher prices can you start to really destroy demand." Crosby hinted at prices potentially doubling and warned that this path would lead to a global recession.