Iran to Reopen Hormuz Strait 30 Days After U.S. Deal to End Hostilities, Sources Say

Business news

A senior diplomatic source in Tehran confirmed to Nikkei Asia that Iran and the United States are discussing a clause that would trigger the reopening of the Strait of Hormuz roughly 30 days after a formal cease‑fire deal is signed. The Strait, which handles about 20 % of global oil shipments, has been partially blocked by Iranian forces since the conflict escalated in early 2024. Under the proposed schedule, Iranian naval units would stand down their anti‑shipping operations within a month, allowing commercial tankers to transit the waterway again.

Market context

The blockage has already forced oil traders to reroute cargoes around the Cape of Good Hope, adding an average of 1.5 million barrels per day to the world’s spare capacity. According to the International Energy Agency, global oil inventories fell to 95 days of demand in early May, the lowest level since 2021, as the Hormuz bottleneck pushed the Brent‑WTI spread to a record $12 per barrel.

European refiners have been paying a $2‑$3 premium per barrel for Middle‑East crude, while Asian importers have shifted roughly 8 million tonnes of oil to West‑African supplies, driving up spot prices for West‑African sweet crude by 6 % month‑over‑month. Shipping insurers have raised war‑risk premiums for the Gulf to $45,000 per vessel, up from $18,000 a year earlier.

If the Strait reopens on the proposed timeline, analysts at BloombergNEF estimate that the premium on Middle‑East crude could fall by $4‑$5 per barrel within two weeks, shaving roughly $1.2 billion off daily global oil trade costs. The United Nations’ Oil Market Report projects that a full reopening would add about 2.3 million barrels per day of spare capacity, enough to offset the current inventory deficit and stabilize Brent at around $78‑$80 per barrel.

What it means

For oil‑producing nations, the prospect of a quicker reopening reduces the incentive to accelerate non‑OPEC output, which could keep OPEC+ production cuts largely intact. Saudi Arabia’s Ministry of Energy has already signaled that it will maintain its 1.2 million‑barrel‑per‑day cut until the market shows sustained balance.

For shipping firms, the timeline offers a clear horizon for contract negotiations. Companies such as Maersk and MSC have already begun to re‑file charter agreements that were placed on hold pending a resolution, potentially unlocking $4‑$5 billion in freight revenue that has been idled since the blockade began.

Regional economies that depend on transit fees—particularly the United Arab Emirates and Qatar—stand to recover an estimated $250 million annually in toll revenues once traffic resumes. Conversely, Iran could see a modest boost to its own customs receipts, estimated at $150 million per month, as it re‑establishes control over the strait’s fee structure.

Investors should watch for three near‑term indicators: (1) the formal signing of a cease‑fire agreement, (2) any public statement from Iran’s Foreign Ministry confirming the 30‑day timetable, and (3) the first post‑reopening oil cargoes reported by the American Petroleum Institute. A confirmed reopening would likely trigger a short‑term rally in energy equities, with a particular upside for integrated majors that have exposure to Middle‑East supply chains.

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This analysis draws on data from the International Energy Agency, BloombergNEF, and industry shipping reports. For further reading on the strategic importance of the Strait of Hormuz, see the U.S. Energy Information Administration’s briefing and the International Maritime Organization’s risk assessment.