Saudi Aramco’s chief executive told investors during the company’s first-quarter earnings call that restarting full crude exports through the Strait of Hormuz would take “many months, not many weeks” once hostilities between the United States and Iran end. That timeline, paired with the International Energy Agency’s latest supply data, points to a global oil market that will not find its footing before 2027, no matter how quickly diplomats reach a deal.
The consequences are already at the pump. Regular gasoline in the United States averaged above $5.40 a gallon in late May 2026, according to AAA. Jet fuel climbed past $4 a gallon for the first time since the post-pandemic spike, according to IATA’s Jet Fuel Price Monitor. Diesel surcharges have become standard on nearly every domestic trucking route. Behind all of it: a waterway that carried roughly a fifth of the world’s oil before conflict choked it nearly shut in February, and a recovery that the IEA now measures in more than one billion barrels of cumulative lost supply through May.
The numbers behind the shortage
Hormuz throughput collapsed from above 20 million barrels per day in early February to approximately 3.8 million barrels per day by early April, an 80 percent drop that instantly removed one in every five barrels consumed globally. The IEA’s May Oil Market Report documented the fallout: global commercial inventories fell by 129 million barrels in March and another 117 million in April, a combined draw of 246 million barrels in just two months. No modern supply crisis has drained stockpiles that fast.
At the field level, the agency estimates that peak shut-in production across the affected Gulf states reached roughly 14 million barrels per day during the worst weeks. Some capacity has since trickled back through alternative export routes and reduced domestic consumption, but the May report warned that “supply will likely be slower to recover” than initial optimism suggested, even if Hormuz flows begin to resume in the third quarter of 2026.
Demand, meanwhile, has started to bend but not break. The IEA trimmed its 2026 global oil demand growth forecast in May, citing early signs of demand destruction at current prices, particularly in U.S. gasoline consumption and Asian petrochemical feedstock purchasing. But the reduction was modest: roughly 400,000 barrels per day off earlier projections, nowhere near enough to offset millions of barrels per day of lost Gulf supply.
Why a ceasefire would not bring quick relief
Reopening a strait is not like flipping a switch. Mines need to be cleared, insurance underwriters need to re-rate tanker voyages, and port infrastructure on both the Iranian and Emirati coasts requires inspection after months of military activity. As of late May 2026, no government or military authority has published a binding schedule for resuming full tanker escorts through the waterway, and Swiss-mediated diplomatic talks between Washington and Tehran have produced framework language but no operational ceasefire agreement.
Even once ships can transit safely, the oil itself is not ready to flow. Wells shut in for months lose reservoir pressure, surface equipment corrodes, and supply chains for replacement parts are already strained. Industry experience from past disruptions in Libya and Iraq shows that announced restart dates routinely slip by quarters, not weeks. The U.S. Energy Information Administration’s Short-Term Energy Outlook now models a later reopening and a longer ramp-up for shut-in production than its earlier forecasts assumed, pushing its Brent price projections well into 2027 before any meaningful softening.
Satellite-based tanker tracking services have offered partial estimates of Hormuz traffic since April, but port authorities and producers have not confirmed those figures. Without hard data on month-by-month throughput, every supply forecast carries a wide margin of error, and analysts are left relying on proxy signals: freight rates, refinery run cuts, and changes in floating storage volumes.
Where the pain lands first
The burden is landing hardest on import-dependent economies in South and Southeast Asia that relied on Gulf crude shipped through Hormuz. Those countries face the sharpest price increases and the thinnest inventory cushions. Weaker currencies compound the damage: India’s crude import bill, for example, has risen faster in rupee terms than the dollar-denominated benchmark would suggest, feeding inflation that was already elevated before the crisis.
Japan and South Korea, both major Gulf crude buyers, have drawn down strategic reserves but cannot sustain that pace indefinitely without coordinated international releases. Tokyo and Seoul have both called for an IEA-coordinated stock release, though member nations remain divided on the scale and timing.
In the United States, the Strategic Petroleum Reserve offers a buffer, but post-2022 drawdowns left stockpiles well below historical norms before the Hormuz crisis began. Refiners on the Gulf Coast have pivoted toward Western Hemisphere grades, tightening supplies of Latin American and Canadian heavy crude and bidding up prices for those barrels as well. U.S. shale producers have responded to higher prices with incremental drilling, but the Permian Basin’s growth trajectory is constrained by pipeline capacity, labor shortages, and investor pressure to maintain capital discipline. The EIA’s May outlook projects U.S. production gains of roughly 300,000 to 400,000 barrels per day over the next year, meaningful but far short of the millions of barrels per day offline in the Gulf.
OPEC+ members outside the conflict zone, particularly producers in West Africa and Central Asia, are benefiting from higher prices but have limited spare capacity to bring online quickly. The group has signaled willingness to adjust output targets, yet the volumes available for a rapid increase are modest compared to the scale of the shortfall.
What Aramco’s pipeline can and cannot do
Saudi Aramco’s East-West pipeline, originally built as a strategic hedge against exactly this kind of Hormuz disruption, has performed as designed. Routing crude from eastern oil fields across the kingdom to Yanbu on the Red Sea allowed Aramco to keep exporting while competitors scrambled. The company’s first-quarter profit jumped 25 percent, reflecting both higher prices and its ability to deliver barrels when others could not.
But the pipeline’s expanded capacity of roughly 7 million barrels per day is a hard ceiling. Saudi Arabia’s own domestic consumption, refinery feedstock needs, and contractual obligations to Asian buyers all compete for those barrels. Aramco’s CEO noted during the earnings call that the workaround “cannot substitute for a functioning strait” and that sustained high utilization increases maintenance risk over time.
No comparable bypass infrastructure exists for the other major Gulf exporters. Iraq’s southern terminals, Kuwait’s Mina al-Ahmadi, and the UAE’s Jebel Ali all depend on Hormuz access. The UAE’s Habshan-Fujairah pipeline, which can move about 1.5 million barrels per day to a terminal outside the strait, is the only other significant alternative, and it too is running near capacity. Combined, the two bypass pipelines can handle fewer than 9 million barrels per day, less than half of what Hormuz carried before the crisis.
The road to 2027 and who picks up the tab
Both the IEA and EIA are converging on a similar conclusion: even under scenarios where Hormuz gradually reopens in the second half of 2026, global oil markets will not return to a balanced state before mid-2027 at the earliest. Rebuilding the 246 million barrels of inventory drawn down in March and April alone would require months of surplus production that no current forecast projects. Add the billion-plus barrels of cumulative lost supply, and the math points to a prolonged period of tight markets, elevated prices, and heightened sensitivity to any new disruption.
For consumers, that means fuel costs are unlikely to retreat meaningfully this year. For airlines, hedging programs locked in before February are expiring into a market where forward curves remain steep. For manufacturers, petrochemical feedstock costs will continue to squeeze margins. And for policymakers facing elections and public frustration, the menu of options that can actually move prices quickly is painfully short: coordinated reserve releases buy time, not solutions, and domestic production gains take quarters to materialize.
The world built its energy logistics around a single chokepoint. When that chokepoint failed, no combination of pipelines, strategic reserves, or diplomatic optimism could close the gap fast enough. The adjustment will be measured in years, not months, and the bill is already arriving at gas stations, airport fuel farms, and factory loading docks on every continent.
