A two-week ceasefire announced by the US and Iran prompted immediate market bets on a swift reopening of the Strait of Hormuz. However, data presents a starkly different picture—on the day the ceasefire took effect (April 7th), only 7 energy-related vessels transited the strait, representing just 15% of pre-conflict energy traffic. By April 8th-9th, crossings had plummeted to near zero. Despite the ceasefire agreement, the strait was effectively more congested than the day before.

According to Zhuifeng Trading Desk, Parsley Ong, Head of Asia Energy and Chemicals Research at J.P. Morgan, stated in a recent report that the current oil forward curve largely prices in an "aggressive reopening" scenario. This scenario assumes Hormuz energy flows recover to 50% of pre-war levels by May and reach 100% by June. However, if full recovery is delayed until July, oil prices face an upside risk of $15 to $20 per barrel relative to the current forward curve. In other words, the market is pricing in the smoothest possible script, leaving little room for error.

The volume of cargo stranded on the western side of the strait is already substantial. As of April 9th, a total of 346 energy vessels were waiting, 241 of which were fully laden. Combined, these vessels hold 104 million barrels of crude oil and condensate, 5.5 million barrels of LPG, and 1.3 million tonnes of LNG. The smooth departure of these cargoes would have a far greater impact on replenishing global inventories than releasing onshore reserves. Concurrently, upstream production shutdowns across the Middle East have accumulated to 11.3 million barrels per day. Most of these shutdowns are not due to damaged facilities but are a result of export disruptions forcing wells to close as storage tanks near capacity.

Energy traffic nearing zero highlights physical bottlenecks constraining recovery speed. Pre-conflict, 120 to 140 vessels of all types transited the Strait of Hormuz daily, with approximately 45 related to energy. Post-ceasefire, physical constraints are proving harder to overcome than geopolitical ones. The only currently available transit corridor is in the Larak-Qeshm area, which, constrained by channel width, theoretically allows a maximum of 12 to 15 vessels per day.

The prioritization of vessel movement remains an unresolved variable. Questions such as whether outbound or inbound vessels take priority, the precedence of energy carriers over container or bulk carriers, and the allocation of slots for crude tankers versus LPG carriers among outbound energy ships all lack clear answers. Of the 12 vessels that transited on April 7th, 7 were energy-related (5 outbound, 2 inbound), a volume equivalent to just 9% of the pre-war daily average.

The situation for LNG is particularly dire. The only LNG carrier to transit the strait since the ceasefire was a vessel in ballast, currently stationed offshore Oman's LNG facilities. Two fully laden Qatari LNG carriers (Al Daayen and Tasheeda) headed towards the strait entrance on April 6th but subsequently turned back. There are currently 16 LNG carriers within the strait, 13 of which are fully laden, holding a combined ~1.3 million tonnes of LNG. Of this, 50% was originally destined for South Korea, 12% for India, and 16% for Pakistan.

Market prices assume "full recovery by June"; a one-month delay implies a $15-20 pricing error. J.P. Morgan has modelled three scenarios to assess the impact of different recovery paces on global oil inventories and prices.

"Aggressive Reopening": Recovery to 50% of pre-war levels by May, reaching 100% by June. This is essentially what the current forward curve reflects. "Middle" Scenario: Recovery to 50% only by June, reaching 100% by July—just one month later than the aggressive scenario, but corresponding to an oil price upside of $15 to $20 per barrel. "Slow" Scenario: Flows drop further to 5% of pre-war levels in April, recover to 50% by July, and only reach 100% by August. Under this path, global oil inventories would bottom out at 6.9 billion barrels in August, remaining 12% below pre-war levels two years later. However, a supply shock of this magnitude would likely trigger significant US shale oil production growth and demand destruction. If supply growth were to outpace demand growth by 3 million barrels per day starting April 2027, global inventories could roughly return to pre-war levels by the end of 2028. The core difference between the three scenarios is not "if" recovery happens, but "at what speed"—a question for which there is currently no clear answer.

Subsidies are burning through cash, controls are tightening, and Asian governments' fiscal buffers are thinning. The energy price shock is rapidly eroding the fiscal space of governments.

Japan's monthly expenditure to cap gasoline and diesel prices is 500 billion yen, with the national treasury holding only 1 trillion yen as of end-March. Malaysia's monthly fuel subsidy bill has surged from 700 million ringgit pre-conflict to 4 billion ringgit. Indonesia's 2026 energy subsidy budget is 381 trillion rupiah, with authorities estimating a need for an additional 100 trillion rupiah.

Government responses are broadly similar: export bans to secure domestic supply, price caps to control inflation, and usage restrictions to curb demand. South Korea extended its price caps of 1,934 won per liter for gasoline and 1,923 won for diesel until April 23rd. India has implemented priority allocation for LPG, favoring hospitals, food processing, and agriculture, with limited supplies for other sectors. Bangladesh has mandated retailers to close by 7 PM and compressed office hours to 9 AM - 4 PM. Indonesia imposed a daily fuel rationing limit of 50 liters for private vehicles starting April 1st. The common logic of these policies is to pass the pressure of shortage downstream rather than solving the supply problem itself.

Restarting 11.3 million barrels per day of shut-in production is not as simple as turning a valve. Of the Middle Eastern upstream production losses, Iraq contributes 3.4 million bpd (from 9 southern oilfields), Kuwait 1.4 million bpd, the UAE 2.2 million bpd, Saudi Arabia 2.0 million bpd, and Qatar 0.5 million bpd. Most of these shutdowns resulted from wells being closed due to full storage tanks and blocked exports, not direct facility destruction, theoretically allowing for relatively quick restarts.

However, several cases involving damaged infrastructure will require more time. The UAE's Fujairah port was hit by drone attacks on March 14th and 16th, causing fires in crude storage tanks and partially halting loading operations. Qatar's Pearl GTL plant was struck by a missile, severely damaging one of its two trains with a combined capacity of 300,000 bpd; repairs are expected to be complex. Iran's South Pars condensate processing facility was attacked, reducing output by 170,000 bpd. This implies that even if the Strait of Hormuz passage is fully reopened, the recovery of some production capacity will take time and will not automatically rebound with the ceasefire.