Daijiworld Media Network – New York

New York, Jun 15: High oil and gasoline prices, along with global energy supply disruptions, are unlikely to ease immediately despite Sunday's agreement to end the Iran war and reopen the Strait of Hormuz, energy experts have warned.

Analysts said it could take several months before energy companies restore operations sufficiently to meet global demand. The slow process of shipping and refining crude oil, coupled with lingering concerns over security in the region, is expected to delay any immediate relief in fuel markets.

Ships carrying crude oil have remained stranded in the Persian Gulf for more than three months due to safety concerns. Before the conflict, the Strait of Hormuz handled nearly one-fifth of the world's oil and fuel supplies, making it one of the most critical energy transit routes globally.

Daniel Evans, Global Head of Fuels and Refining Research at S&P Global Energy, said rebuilding confidence among shipping operators and insurers would take time.

"It’s going to take time for people to feel comfortable and for insurance to be in place, particularly to get personnel back on the ground and restart some of these assets," Evans said.

He explained that stranded vessels must first leave the strait before new tankers can enter for loading. Shipping companies would also need assurance of a sufficiently long safety window to move vessels through the region without risk.

Evans noted that oil transportation itself is a lengthy process, with tankers often taking months to deliver crude to refineries in distant countries, where it is processed before reaching consumers.

The conflict also forced some oil producers in West Asia to halt extraction after exhausting available storage capacity. Restarting such production, known as a "shut-in," can be a complex and time-consuming process.

Alan Gelder, Senior Vice President for Refining, Chemicals and Oil Markets at analytics firm Wood Mackenzie, said countries such as Saudi Arabia and the United Arab Emirates may be among the first to restore production because they have alternative pipelines and export routes that bypass the Strait of Hormuz.

However, countries like Iraq could face a much longer recovery period due to larger shutdowns and more complex oilfield operations.

"They've had a much bigger shutdown and their fields are more difficult. It may take about a year before they return to previous production levels," Gelder said.

He added that investment across the energy sector had largely stalled following the closure of the strait, and restarting those projects would also take considerable time.

Daniel Sternoff, Senior Fellow at the Center on Global Energy Policy at Columbia University, said oil-producing nations would likely remain cautious about restarting production until they are confident the ceasefire is durable and the waterway remains open beyond the short term.

"We don't know what open means or what the speed of evacuation of trapped material is going to be," Sternoff said.

Experts said that while the reopening of the Strait of Hormuz is a significant step towards stabilising global energy markets, the impact on fuel prices and supplies may not be felt for several months as the industry works through logistical, operational and security challenges.