When 2026 started, closing the Strait of Hormuz was unthinkable. Now, the unthinkable hasn’t just happened, it’s been happening for 10 straight weeks.
The supply shock is so immense that Saudi Aramco, the world’s largest oil exporting company, is now publicly warning the issue may not get resolved this year.
If the reopening of the Strait of Hormuz is “delayed by a few more weeks, then normalization will last into 2027,” Saudi Aramco CEO Amin Nasser told analysts on a conference call Monday.
Even if the vital waterway were to reopen today, Aramco warns it would “still take months for the market to rebalance.”
In other words, even in the best-case scenario, pre-war lower energy prices are most likely not coming back anytime soon.
With the Strait of Hormuz remaining closed, the world has been rapidly drawing down oil inventories, which act as shock absorbers for the system.
Crude oil inventories are on track to plunge below 2022 levels and approach “operational stress levels by early June,” JPMorgan Chase told clients on Monday.
JPMorgan argued vanishing oil inventories will “force” the reopening of Hormuz “one way or another.”
However, the bank cautioned that supplies won’t normalize quickly and barrels of crude oil will likely stay in the “low $100s for most of the rest of the year.”