I told the New York Post that I think it’ll take until near the end of 2026 for oil markets to normalize.
Now that we have a ceasefire between the US and Iran, an immediate question exists around how long it’ll take for oil markets to approach their state in February, before the war started.
That’s not to mention whether the ceasefire itself will hold, or whether it will lead to an enduring diplomatic resolution.
Assume both of those conditions exist.
What has to happen for oil markets to normalize?
At a high level, we need three things to happen, in this sequence:
1️⃣ Vessels need to start traversing the Strait of Hormuz
2️⃣ Storage tanks in the region need to be unloaded
3️⃣ Production can then commence
And each of those three comes with its own timescale.
Traffic in the Strait of Hormuz itself could take weeks or months just to clear the existing backlog.
Then you have the time needed to empty storage tanks to the point that they can absorb new production.
Then you have to determine what repair or remediation is required to get production back to February levels.
Clearly there are obstacles around the ceasefire that markets will have to navigate before we get into the true normalization conversation.
📌 Still, it’s worth internalizing that this isn’t a light switch.
The disruption came in a matter of days.
The healing will require months.
