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Strait of Hormuz Traffic Boost Needs Guarantees
18 Apr
Summary
- Increased Hormuz traffic requires U.S. guarantees for shippers.
- Oil prices expected to remain elevated above pre-war levels.
- Persian Gulf states need 3-6 months for full oil production.
Commercial shippers are awaiting further assurances from the U.S. before significantly increasing traffic through the Strait of Hormuz. RSM chief economist Joe Brusuelas indicated that while tanker activity in the strait is expected to rise soon, it will likely be channeled through Iran's preferred routes, thus constraining broader commercial operations.
The ongoing global economic ripple effects from the conflict continue to be felt. Persian Gulf states are still assessing the physical damage to their oil production and refining capabilities across the region. Consequently, oil prices are anticipated to remain elevated above pre-war benchmarks for a considerable duration.
Brusuelas cautioned that a full return to pre-conflict oil production levels for the Gulf states is not expected for another three to six months. He described the situation as a "rolling crisis" that will not be resolved quickly, comparing it to more than simply turning off lights at home.
