A US-Iran memorandum has reopened the Strait of Hormuz after 108 days, but structural damage to energy markets, insurance and tanker routes will persist well beyond the diplomatic announcement

WHAT: Hormuz carried 20mn bpd, with the blockade removing 12mn bpd from markets.

WHY: Covert US-escorted dark transits and pipelines partially offset the collapse in visible flows.

WHAT NEXT: Full traffic normalisation is a 2027 story, with mines and insurance unresolved.

For 108 days, the world’s most consequential chokepoint was effectively closed for business. The memorandum of understanding between Washington and Tehran, signed in principle on June 15, drew a line under the most severe interruption to global energy supply since the Arab oil embargo of 1973.

Brent crude fell to around $81.15 per barrel on the announcement, as WION reported, and oil futures settled at a three-month low, according to CNN and CNBC. The relief was, in several respects, premature: the structural vulnerabilities this episode exposed are not resolved by a 14-point document signed under diplomatic pressure.

Baseline

Consider what the strait ordinarily carries. Roughly 20mn barrels per day transited Hormuz before the conflict erupted, the Financial Times reported – around 20% of global oil consumption.

Wood Mackenzie data, compiled by VesselTracker, showed Middle East crude exports running at 18.7mn bpd in early February, with Lloyd’s List recording 135 to 138 vessels crossing daily. No alternative route, however expanded, could replicate that throughput.

The producers most exposed were Iraq, Kuwait and the UAE. Saudi Arabia possessed the most credible bypass option via its East-West pipeline to Yanbu, though that infrastructure was never designed to carry full export capacity under wartime conditions. Qatar’s LNG terminals sit squarely inside the Gulf, leaving its tanker fleet stranded without transit rights.

War-risk insurance premiums rose around eight-fold during the closure, the Financial Times reported, and Kpler estimated that oil prices would have needed to reach $160 to $170 per barrel to rebalance global markets without covert intervention.

Flow collapse and the shadows

The deterioration was rapid. VesselTracker and Wood Mackenzie data showed vessel crossings falling from 135-138 per day to just 10 by March 2, and to 4 by April 6.

Only 16 laden crude tankers crossed Hormuz in all of April. Commercial traffic declined to roughly 2% of pre-conflict levels, removing around 12mn bpd from global markets, according to the Financial Times. Basrah had loaded no crude since early March, over 90 crude tankers sat anchored in the Gulf alongside more than 50 LNG vessels, and every tonne of East-West jet fuel was rerouted via the Cape of Good Hope.

What prevented a complete collapse was a covert passage operation that became the defining feature of the crisis. Under US military and air cover, roughly 15 tankers per night transited the southern Omani coast with AIS systems switched off – the dark corridor.

Ship-to-ship transfers were conducted around six kilometres off Sohar, and Doug Burgum, the US interior secretary, noted on Bloomberg that some nights saw more than 20 ships transiting. Iraq, Kuwait and the UAE collectively moved around 3mn bpd by these methods, the Financial Times reported.

Kpler calculated an average of 1.9mn bpd from early April, with JP Morgan’s peak estimate at 2.1mn, according to the Guardian. Lloyd’s List recorded 36 transits in the first week of June, of which 17 were dark.

Saudi Arabia meanwhile expanded Yanbu loadings from roughly 735,000 bpd before the conflict to over 3mn, VesselTracker and Wood Mackenzie data showed; the UAE routed around 1.5mn bpd via Fujairah.

Combined pipeline reroutes reached around 4.5mn bpd, the Guardian reported, still leaving a deficit exceeding 7mn bpd through legitimate channels. Iran’s shadow fleet continued to deliver between 0.8 and 1.5mn bpd to China regardless, Kpler found, while the IRGC’s newly established “Persian Gulf Strait Authority” levied tolls on transiting vessels until the US Treasury designated it on May 27.

Devil in the detail

President Trump’s public characterisation of the agreement was characteristically expansive. He claimed the corridor had moved more than 100mn barrels and 200 ships – figures the Guardian noted were broadly consistent with Kpler’s tracking data.

The substance of the MoU is rather more modest. The 14-point document provides for 60 days of toll-free passage through the strait, after which management reverts to Iran and Oman jointly, according to the Guardian. Tehran has indicated a 30-day implementation timeline before full operations resume, The National reported. Formal signing is scheduled for June 19 in Geneva. Chris Wright, the US energy secretary, estimated in a LinkedIn fuel market update that around 7mn bpd, including pipeline volumes, were transiting by the time the deal was announced.

The agreement is, in effect, a temporary ceasefire for maritime commerce. It does not resolve the underlying geopolitical dispute, does not address Iranian nuclear ambitions, and does not remove the mines that both navigational and insurance bodies believe remain in the waterway.

BIMCO said it had “insufficient information” to advise safe transit as of the announcement. Andrew Lipow, of Lipow Oil Associates, flagged uncleared mines as a material concern. Amrita Sen, founder of Energy Aspects, described the deal as one that “brings some relief to an anxious market” but cautioned against assuming a smooth passage back to normalcy.

Normalisation outlook

The scale of the backlog is considerable. Kpler and the Guardian estimated around 483 vessels trapped in the Gulf region, including around 220 tankers; Reuters placed 155 still outstanding as of June 15.

At 15 safe transits per day, US News reported that clearing the queue would take eight to ten days. Ana Subasic, trade risk analyst at Kpler, placed normalisation at four to eight weeks, she told The National.

Matt Smith, lead oil analyst at Kpler, projected three to four months before pre-conflict volumes return, he told CNN. David Jorbenaze, global oil market leader at ICIS, was blunter still: full pre-conflict throughput is a 2027 scenario, he told Reuters – a view the EIA shares.

China drew around 13mn barrels in the week to May 24 alone, India 5mn and Japan 2mn, according to VesselTracker data; rebuilding those reserves will sustain demand pressure well beyond any physical reopening.

Bob McNally, founder of Rapidan Energy Group, told CNN the deal had removed the immediate risk of a spike toward $160 per barrel, but cautioned that the situation remains fragile. Tamas Varga, an analyst at PVM Oil Associates, told Reuters that the market’s reaction reflected relief, not resolution. Jan Stuart, energy economist at Sandler, highlighted to the Guardian the structural reconfiguration of tanker routes as a lasting legacy of the closure.

Stress-test

The Hormuz closure of 2026 acts as a stress-test of assumptions embedded in global energy security architecture since the late 1970s. That the strait is reliably open, that disruptions of this scale are theoretical, that strategic reserves provide adequate cover – each of those premises failed.

The covert corridor revealed both the ingenuity of crisis management and its limits: roughly 2mn bpd in dark transits cannot substitute for 20mn through open water.

Insurance, financing and routing markets repriced in ways that will not fully unwind at the stroke of a diplomatic pen. No bilateral memorandum, however, carefully drafted, can neutralise physical risk embedded in a contested waterway. Energy security belongs firmly on the board agenda – not as a hedging footnote, but as a primary strategic variable.