Energy analysts say the world avoided the worst-case forecasts from the Strait of Hormuz shutdown because of strategic reserves, North American production, alternate shipping routes and rapid market adjustments, but depleted stockpiles leave future disruptions harder to absorb.
By yourNEWS Media Newsroom
The U.S.-Iran ceasefire has reopened a path for oil traffic through the Strait of Hormuz, but energy experts warn that the world may not be as well positioned to withstand another major disruption after months of heavy reliance on stockpiles and emergency supply adjustments.
President Donald Trump signed a memorandum of understanding with Iran on Wednesday, beginning a 60-day pause in hostilities while the two countries attempt to negotiate a longer-term agreement. Trump said the deal immediately reopened the Strait of Hormuz, and vessels began to move through the waterway Thursday.
The agreement followed months of blockades by the United States and Iran that brought oil traffic through the strait close to a standstill. Roughly 20 million barrels of crude oil and petroleum products normally move through the Strait of Hormuz each day, making it one of the most important energy routes in the world.
The disruption was larger than several historic oil shocks, including the 1973 OPEC oil embargo, the 1979 supply crisis tied to the Iranian Revolution and the market shock following Russia’s 2022 invasion of Ukraine, according to supply-loss comparisons cited by the International Energy Agency. Some analysts warned in March that crude could climb above $200 per barrel.
That worst-case scenario never materialized.
There were no long gasoline lines across the United States, and the West Texas Intermediate benchmark did not break $130 per barrel during the conflict, even as one of the world’s most important shipping lanes was effectively blocked for nearly four months.
“People tend to always forget how resilient and innovative the US oil and gas industry, and the global oil and gas industry, truly is,” David Blackmon, an energy analyst with more than 40 years in the industry, told Just the News.
Analysts cited in a Just the News report said a full return to normal energy flows could still take months or years, depending on whether the ceasefire holds and whether the United States and Iran reach a durable agreement.
Blackmon, author of the Energy Additions Substack, said several factors helped prevent the disruption from becoming a global energy crisis.
Strategic reserves played a central role. Countries had stored oil for decades to soften the kind of supply shocks that caused severe economic damage in the 1970s. The United States’ Strategic Petroleum Reserve, created for that purpose, stores crude in 60 salt caverns that are about 200 feet wide and more than 2,500 feet deep. Other countries also rely on salt caverns, ground tanks and floating storage.
Jim Burkhard, global head of crude oil research at S&P Global Energy, told The Washington Post earlier this month that “These shock absorbers have been surprisingly effective.”
Major consumers also changed behavior quickly. Blackmon said on X that China reduced exports, allowing it to hold more refined products domestically and lower its import needs by about 4 million barrels per day.
Venezuela also increased exports faster than expected. The country exported an estimated 1.25 million barrels per day in May, with the United States, India and Europe among its main buyers. Blackmon attributed the increase in part to greater U.S. influence over Venezuela after the capture of President Nicolás Maduro.
Middle Eastern allies also relied on alternate routes to bypass the Hormuz bottleneck. Saudi Arabia restored the full capacity of its East-West pipeline to 7 million barrels per day, an increase of 700,000 barrels per day.
Another major factor was North American production.
Tim Stewart, president of the U.S. Oil and Gas Association, described the region’s energy position as “Fortress North America”. Advances in hydraulic fracturing and horizontal drilling helped make the United States the largest oil producer in the world. Combined with Canadian production, that output helped provide a supply cushion during the crisis.
Still, experts said the tools that prevented an energy emergency are now weakened.
Strategic reserves and commercial inventories were heavily drawn down during the conflict. Experts had already warned that supplies were approaching dangerous lows before the ceasefire.
Robert Rapier, a chemical engineer and editor-in-chief of Shale Magazine, told Just the News that the market is acting as though the conflict has been fully resolved, even though the 60-day negotiating window leaves major questions unanswered.
Trump has said Iran must end nuclear enrichment, move its enriched uranium stockpiles abroad and never obtain a nuclear weapon. If Iran refuses those terms or if Trump refuses to compromise, negotiations could collapse and hostilities could resume.
Rapier said oil markets are not fully accounting for that risk. Prices were in the mid-$70s per barrel Thursday morning, according to oil price data, despite the depleted inventory situation and uncertainty over the ceasefire.
“The complete and utter disconnect is the oil markets just selling off like everything has returned to normal,” Rapier said.
He warned that the United States’ Strategic Petroleum Reserve is near historic lows and will need to be replenished.
“They’re going to have to replenish those, or they’re going to be running without petroleum reserves. That’s a really risky thing to do,” Rapier said.
If fighting resumes after the 60-day ceasefire or another disruption hits global markets, the reserves available to cushion the blow may be weaker than they were when the Iran conflict began.
Rapier also said traffic through the Strait of Hormuz may not immediately return to normal. Questions remain over how quickly shipping will recover, whether new fees or tolls will be imposed and whether insurers will continue charging elevated premiums because of perceived risk.
“The way things look, probably over the next couple of years, is probably bullish for oil,” Rapier said.
He said average U.S. gasoline prices are unlikely to fall below $3 per gallon again soon, even if crude prices continue to ease temporarily.
“But investors are going to do what they’re going to do. They’re going to bid, and if they all believe that inventories are okay and there’s nothing to worry about, prices could drop back down. But on a fundamental basis they should not,” Rapier said.
The ceasefire has eased immediate fears of a deeper energy shock, but analysts say the conflict exposed how dependent global markets remain on strategic reserves, North American production, alternate pipelines and rapid adaptation when a major chokepoint shuts down.
Those measures prevented a crisis this time. Whether they can do so again may depend on how quickly reserves are rebuilt and whether the U.S.-Iran agreement becomes a lasting peace.