On Wednesday evening, President Donald Trump officially signed a Memorandum of Understanding with Iran, setting off a 60-day ceasefire and reopening the Strait of Hormuz. The narrow waterway typically handles 20 million barrels of oil per day. By Thursday morning, 10 vessels stranded for the entire 110-day US-Iran war began moving out of the area, according to Windward, a maritime intelligence firm. However, experts caution that US consumers should not expect gas prices—which have jumped more than 35 percent nationally since late February—to recover soon.
Fragile Peace and Lingering Risks
The Strait of Hormuz remains seeded with an indeterminate number of underwater mines, and President Trump continues to threaten violence in the area. “We will bomb them” if Iran does not permanently shut down its nuclear program, the president told reporters Wednesday. “It’s amazing what bombs can do.” Jason Miller, a professor of supply chain management at Michigan State University’s Eli Broad College of Business, noted that for the consumer, there is no sign that prices are heading back to February levels just yet. “The global oil supply-demand balance, big picture, has been incredibly disrupted,” he said. People who buy gas, food, fertilizer, and anything else dependent on oil-based products should not count on a rapid recovery.
Shipping and Safety Challenges
Jakob Larsen, the chief safety and security officer at BIMCO, the world’s largest international shipping organization, said in a written statement that the industry still views the Strait as a safety risk. Its central part is “mined and un-navigable,” meaning ships’ safest routes are likely in narrower channels closer to Iran or Oman. The memorandum did not include important details such as which routes are safest, how ships might move in opposite directions, whether militaries will assist operations, or whether Iran might impose tolls. “Credible assurances from both sides of the conflict must be given before traffic can resume fully to pre-conflict levels,” Larsen wrote.
Michelle Wiese Bockmann, a senior maritime intelligence analyst at Windward, stated that routes must be de-mined, but “nobody knows how long that will take—six weeks or six months.” Trump earlier said the effort to clear mines is underway, potentially involving multiple countries, minesweeping ships, underwater drones, military divers, and even US Navy-trained mine-detecting dolphins (though CNN reported dolphins are unlikely currently operating in the area).
| Aspect | Pre-War | Current Situation |
|---|---|---|
| Strait Status | Open, routine shipping | Reopened but mined and high risk |
| Oil Flow | ~20 million bbl/day | Restarting, stranded vessels moving |
| Gas Prices (US) | Pre-February levels | +35% since late February |
| Shipping Insurance | Normal | Exploded, with long-term rerouting |
Demand and Supply Disruption
The war may have permanently altered global shipping, as Iran demonstrated it can shut the strait. Oil production machinery is only just grinding back to a start. Although crude oil prices have fallen since the memorandum’s announcement, consumers would be wise to budget for higher wartime prices for the longer haul. “This is an incredibly fragile situation,” Miller said. Additional risks include potential Iranian tolls on passing ships, which could add costs. Shipping insurance rates have exploded, and vessels rerouted around Africa, delaying deliveries of oil, auto parts, fertilizer, and other goods.
Outlook for Commodity Traders
For commodity traders and procurement teams, the reopening of the Strait of Hormuz is a positive step, but the timeline for normalized flows remains highly uncertain. The demining process, threat of renewed conflict, and potential tolls mean that oil and gas prices could remain elevated. Key data to watch include US EIA inventory reports, oil tanker tracking from Windward, and any further US-Iran negotiations. As Miller put it, “None of these things would have happened if you had not had the war.” The market must now navigate a fragile peace with persistent supply-side risks.
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