① Energy analysts have warned that despite the end of the war, a return of crude oil prices to normal levels may still be a distant prospect; ② Following the reopening of the Strait of Hormuz, the market faces a crude oil shortage, and prices are unlikely to revert to pre-war levels within the year; ③ Numerous uncertainties and obstacles—such as logistical bottlenecks, prolonged production recovery timelines, and shipping insurance issues—are making it difficult to alleviate price pressures in the oil market.
The war that disrupted oil markets and pushed up crude prices this year has largely ended. However, energy analysts warn that a return to normal oil prices may still be a long way off.
In fact, oil prices had already retreated from wartime highs and fell further this week after the United States and Iran announced an agreement to end the conflict. The agreement is set to be formally signed on Friday, which will reopen the Strait of Hormuz—a closure that had disrupted global oil supplies for over three months.
The reopening of Hormuz has been eagerly anticipated by the market, as it was widely expected to stimulate capital flows in the Middle East, curb rising oil prices, and ease inflationary pressures facing the market.
However, energy experts say this outcome is unlikely to materialize quickly. As crude oil slowly re-enters trading channels and summer approaches, demand continues to rise, potentially leading to a crude shortage in the coming months.
Oil prices unlikely to return to pre-war levels within the year
Analysts note that persistent supply-side pressures are evident in oil prices. Although the Iran war has ended, prices remain significantly above their levels at the start of the conflict. On Tuesday, the international benchmark Brent crude traded at approximately $81 per barrel, up 12% from late February.
In its June forecast, the U.S. Energy Information Administration projected that oil prices will average around $88 per barrel in 2026, implying a 22% increase in Brent crude prices compared to pre-war levels. Goldman Sachs, meanwhile, expects prices to settle around $80 per barrel by year-end, representing an 11% increase.
Numerous uncertainties and obstacles
Energy research firm HFI Research stated that despite the agreement reached between the U.S. and Iran last weekend, it remains closely monitoring ongoing volatility in the oil market. The firm estimates that even if the reopening of the Strait of Hormuz proceeds 'without issues,' tankers would not reach the Persian Gulf until mid-June at the earliest, citing numerous logistical hurdles to restoring oil shipments.
The report also noted that oil production could face 'logistical bottlenecks,' and it would take approximately three months for crude oil output to fully recover.
Previously, the company had warned that the oil market had reached a point of no return, meaning that regardless of how swiftly the conflict is resolved, the crude oil market will suffer long-term damage from the war.
‘Regardless of the situation in the Strait of Hormuz, we are already facing this scenario. The Strait’s failure to reopen by mid-May has already sealed this outcome,’ HFI stated in a client report.
Bob McNally, an analyst at Rapidan Energy and former White House energy advisor to U.S. President George W. Bush, also said that vessel traffic through the Strait of Hormuz might not resume until the end of June.
In an interview on Monday, he added that the long-term structural damage caused by the war might take 'several months' to become apparent, as countries gradually restart production. He further noted that oil inventories could continue to decline as nations race to replenish strategic reserves.
He further explained that summer is also a peak demand season for the oil market, which represents another factor that could push crude prices higher.
McNally stated, ‘Demand is going to rebound significantly.’
He speculated that Brent crude prices could rise above the key $100-per-barrel mark again in July or August.
‘This demand stems from long-suppressed pent-up demand in Asia, combined with countries urgently seeking to rebuild and expand their strategic reserves—potentially outpacing the pace at which Gulf oil supplies return to market. There are many reasons why prices will rise from here,’ he said.
Jeff Currie, former global head of commodities research at Goldman Sachs and currently Chief Strategy Officer at Carlyle Group LP’s Energy Pathways division, said that price pressures in the oil market over the coming months will ease only slightly.
He noted that approximately 60 million barrels of crude oil in the Persian Gulf could be 'released' following the reopening of the Strait of Hormuz, but the market has yet to find a long-term solution for restoring oil supplies, and restarting production will take considerable time.
He stated that countries such as Kuwait, Qatar, and Iraq may require several years to restore their damaged energy supplies, referring to the impaired energy infrastructure in these regions. He added that, in the meantime, marine insurers might be reluctant to provide coverage for tankers operating in the Persian Gulf.
‘The answer is that it will take several months to return to normal, and we won’t see that until the end of the year,’ Curry said.
This week, Mohamed El-Erian, chief economic adviser at Allianz and a prominent economist, also pointed out in an interview that energy markets face risks of long-term damage that have not yet become apparent.
‘The impact of the Iran war on oil markets is profound and will leave indelible scars. So while a peace agreement is certainly good news, it is far from sufficient,’ he added.
Editor/Lambor