A fragile ceasefire in the Iran conflict began amid ongoing explosions in Lebanon and conflicting statements about Iran’s continued control of the strategically vital Strait of Hormuz, through which approximately 20% of global energy supplies transit.
Geopolitical and energy experts indicate the most probable outcomes moving forward involve either Iran gaining increased influence over global energy markets compared to pre-conflict levels, or the current tenuous agreement merely postponing another military escalation by days or weeks.
Bob McNally, former White House energy advisor under President George W. Bush and founder of Rapidan Energy Group, expressed skepticism about the ceasefire’s durability, telling Fortune magazine that the odds favor the agreement either failing to hold completely or unraveling if temporarily implemented. He characterized the April 7 announcement as vague, fragile, and contradicted by Iranian actions – noting it did not justify the nearly $20 per barrel overnight drop in oil prices.
McNally observed that while President Trump did call off a larger planned attack, he remains surprised by markets’ willingness to price in relief so readily. Although experts view a ceasefire as the desired end state, they believe the situation will likely deteriorate before improving.
Following Trump’s profanity-laced threats on April 7 that Iran’s ‘whole civilization will die’ in one night, he announced a two-week ceasefire contingent on Iran opening the Hormuz waterway. Iran agreed to reopen the strait but only ‘via coordination with Iran’s Armed Forces and with due consideration of technical limitations,’ while Iran stated it could continue charging vessel tolls and Oman declared no fees would be imposed – creating immediate contradictions.
Despite Israeli dissatisfaction with the agreement, Israel continued attacking Lebanon on April 8 while Iran maintained the strait closure and threatened to withdraw from the ceasefire.
If the ceasefire holds, Vice President JD Vance, special envoy Steve Witkoff, and Jared Kushner are scheduled for in-person negotiations with Iran in Islamabad on April 11, according to White House press secretary Karoline Leavitt.
Looking ahead, Rystad Energy chief economist Claudio Galimberti views an enduring ceasefire as the most likely scenario but warns it won’t be straightforward. He anticipates Iran asserting control over the strait for several months before any broader, long-term agreement emerges with the U.S. and neighboring Gulf oil-producing states.
Galimberti described the Strait of Hormuz normalization as ‘still far, far away,’ characterizing the situation as very fragile. He believes regular flows through the strait are unlikely before late 2026, though a strengthened ceasefire might allow resumption of approximately one-third of typical vessel traffic.
Shipping data shows oil, LNG, agricultural fertilizer, semiconductor hydrogen, and petrochemical traffic through the strait plummeted to 5% of normal levels in March, briefly rose to nearly 10% for several days in early April, then ceased again on April 8. Only a single Iranian-linked oil tanker passed through the strait on that date, according to Vortexa cargo tracking firm analyst Rohit Rathod.
Substantial work remains before normal operations resume, including clearing mines from the strait and removing hundreds of vessels trapped for over a month. Vessels would then need to reestablish complex global logistics patterns, while Gulf states including Saudi Arabia, Iraq, Kuwait, and the UAE would require many months to restart their oil and gas production volumes, Galimberti noted.
While oil prices declined from over $110 to approximately $94 per barrel following the ceasefire announcement, Galimberti expects prices to remain elevated by at least $10 per barrel above pre-March levels long-term, factoring in higher tanker journey insurance costs. He warned that the ‘political risk premium’ will likely remain embedded in pricing for an extended period.
Restoring normal transit systems requires ensuring insurance availability, commercial trade financing, and the return of empty inbound ballasting vessels. Currently trapped ships seek expedited exit, but resuming other traffic presents significant challenges, according to Alan Gelder of Wood Mackenzie energy research firm, who noted that inbound ballasting vessels are unlikely to enter via the strait sooner than a ‘just-in-time’ logistics basis due to risks of becoming trapped if hostilities resume.
For liquefied natural gas exports primarily sourced from Qatar, shipments could resume by summer’s end, though more than 15% of Qatar’s export capacity may remain offline for years due to severe damages from Iranian attacks.
In the meantime, McNally observes that investors and energy traders appear to be overreacting to the ceasefire news, evidenced by stock market spikes coinciding with oil price drops. He believes the market continues to underappreciate the severity and risks of prolonged Hormuz disruption, reflecting an ‘unwarranted, large reservoir of hope and optimism’ in current pricing.
For this story, generative AI was utilized as a research aid, with editorial verification of all AI-generated content prior to publication.