Strait of Hormuz Closes Again, When Will Global Energy Supply See Light Again?

TradingKey - The outlook for navigation through the Strait of Hormuz remains clouded by uncertainty, as the newly reached ceasefire agreement has failed to bring stability to this global energy choke point.

On April 8 local time, the US and Iran announced a temporary ceasefire agreement. However, just hours later, large-scale Israeli airstrikes on Lebanon pushed the peace to the brink of collapse, prompting Iran to immediately announce the closure of the Strait of Hormuz once again.

According to United Nations statistics, approximately 2,000 vessels of various types and 20,000 crew members have been stranded in the Gulf region since the escalation of the US-Iran conflict in late February. These include oil and gas tankers, bulk carriers, and six cruise ships. Due to the prolonged closure of the strait, most vessels have remained anchored for nearly six weeks.

In the brief period following the announcement of the ceasefire agreement, transit volume through the strait did not see a significant rebound. According to data from S&P Global Market Intelligence, only four vessels were authorized to pass through the Strait of Hormuz on April 8, marking the lowest daily transit volume since April. In contrast, over 100 vessels passed through this critical waterway daily before the conflict erupted.

The White House announced on the 8th that the first round of US-Iran talks would be held in Pakistan on the 11th, but Iran stated that the basis for negotiations has been undermined.

Mohammad Bagher Qalibaf, the Speaker of the Iranian Parliament, stated that before negotiations between Iran and the US could begin, three key terms of Iran's 10-point armistice proposal had already been violated.

First is the term regarding the Lebanon ceasefire, a commitment explicitly mentioned by Pakistani Prime Minister Shehbaz Sharif. Second, a drone intruded into Iranian airspace and was shot down, violating the term prohibiting the violation of Iranian airspace. Third, the US denied Iran's right to uranium enrichment, violating Article 6 of the "Ten-Point Plan."

The continued closure of the Strait of Hormuz poses a direct impact on global energy markets. As a critical waterway carrying approximately 20% of the world's oil and gas transport, the closure has driven international energy prices sharply higher and sparked widespread market concerns over fuel shortages.

Ceasefire Fails to Mask Rifts

Following the announcement of a ceasefire between the U.S. and Iran, global energy markets reacted swiftly, with international oil prices plunging as Brent crude dropped 16% in a single day, breaching the $100 per barrel mark. Consequently, major global equity markets and commodity futures experienced a synchronized short-term rally.

However, analysts noted in subsequent reports that this price retreat is essentially a rapid unwinding of the geopolitical risk premium accumulated earlier, rather than a genuine recovery in physical energy supply. Even if the Strait of Hormuz briefly reopens, previous blockades have already dealt a massive blow to the global oil supply system; global crude inventories remain tight, and transport chains have yet to be fully restored.

Even if the ceasefire holds and the hundreds of tankers stranded in the Gulf gradually receive clearance, analysts generally believe this will not suffice to restore shipments of oil, natural gas, chemicals, and other key materials to pre-conflict levels.

Experts stated that the Gulf region’s energy production capacity could take months or even years to fully recover.

Qatari sources revealed that their primary liquefied natural gas (LNG) production base suffered severe damage following Iranian attacks, resulting in a 17% drop in capacity. Staff predict that repairs could take three to five years to complete.

Wood Mackenzie, an international oil consultancy, expects that if Qatar begins restarting its remaining intact LNG capacity next month, this output would not hit the market until late August. However, the firm’s gas analyst Tom Marzec-Manser noted that it remains unclear whether QatarEnergy would consider resuming operations during the ceasefire.

At the same time, Gulf refineries providing over half of Europe’s jet fuel have been damaged and may take months to return to normal operation. Willie Walsh, Director General of the International Air Transport Association (IATA), recently stated that even if the Strait of Hormuz reopens, restoring supply to required levels will take months given the damage to Middle Eastern refining capacity.

Some pessimistic views suggest that oil and gas exports from the Gulf may never return to pre-war levels. Even if the Strait of Hormuz remains clear and production and refining capacity normalize, many countries will re-evaluate their energy strategies because of this crisis.

In Asia specifically, the crisis has exposed the risks of over-reliance on a single region for energy, making it likely that countries will seek to diversify their sources. For those still dependent on the Gulf, if Iran imposes long-term transit fees on tankers, energy import costs will rise significantly, prompting a shift toward oil and gas producers in regions such as the Americas.

NATO relations under pressure

Meanwhile, divisions between the U.S. and its allies over the Iran conflict continue to widen, further exacerbating the complexity of the regional situation.

Recently, senior NATO officials revealed that the U.S. has demanded that European allies submit specific plans within days to implement their previous commitments to assist with navigation in the Strait of Hormuz. This demand has been raised across multiple levels of meetings at the White House, the Pentagon, and the State Department, coinciding with NATO Secretary General Mark Rutte's visit to Washington to meet with President Trump.

Currently, a UK-led international coalition of more than 40 countries has pledged to assist in reopening the Strait of Hormuz after hostilities in the Middle East conclude. The coalition includes several European nations, Japan, and Canada. Following the announcement of a ceasefire agreement, more than a dozen European leaders also issued a joint statement, promising to "contribute to ensuring freedom of navigation in the Strait of Hormuz."

However, questions remain as to whether the urgent timetable set by the U.S. is realistic. The current ceasefire agreement itself is extremely fragile, with exchanges of fire between Israel and Iran ongoing, and coalition members have yet to clearly indicate whether they believe a viable plan can be produced within days.

Tensions between the Trump administration and European allies over the Iran conflict have continued to intensify recently. Some NATO member states have refused to allow the U.S. to use their military bases for strikes against Iran and have also declined to respond to Trump's calls for assistance in reopening the strait during the conflict.

Following his meeting with Rutte, Trump posted on social media, "When we needed NATO, it wasn't there, and when we need it in the future, it won't be there either." He had previously labeled NATO member states as "cowards" and dismissed the alliance as a "paper tiger."

Notably, U.S. Secretary of State Marco Rubio and U.S. Ambassador to NATO Matthew Whitaker have both previously stated that member states must do more to prove their value to the United States, suggesting that Washington will reassess its relationship with NATO.