- A two‑week ceasefire between the US and Iran has freed some oil cargoes but offers limited relief. Roughly 130 million barrels of crude, 46 million barrels of refined fuels and 1.3 million tonnes of LNG are stranded on about 200 tankers awaiting safe passage.
- Exports slump dramatically: Middle‑East exports via the Strait of Hormuz collapsed by 13 million bpd in March as war damaged pipelines, refineries and ports.
- Longer‑term supply still at risk: Restarting production and restoring infrastructure will take weeks or months and may leave the market 3-5 million bpd tighter over coming years.
A temporary truce in the Middle‑East conflict – brokered by Washington and Tehran – has momentarily stabilised energy markets but left them in an uneasy equilibrium.
Under the deal, Iran agreed to pause its blockade of the Strait of Hormuz, the narrow waterway through which about one‑fifth of the world’s crude and liquefied gas normally flows. In response, US President Donald Trump agreed to halt attacks on Iranian oil and gas facilities.
Markets initially cheered the announcement: Japan’s Nikkei index rose and oil prices plunged. Yet reality quickly tempered that optimism. Within hours of the announcement, Iran launched more missiles and drones at Israeli and Gulf targets, underscoring how precarious the truce is.
The scale of the disruption is unprecedented. Data from analytics firm Kpler show that an estimated 130 million barrels of crude oil and 46 million barrels of refined fuels are trapped on tankers inside the Gulf. An additional 1.3 million tonnes of LNG is sitting aboard carriers that cannot transit the strait.
If Hormuz remains open, those volumes could provide a temporary “relief valve” for global markets, particularly Asian economies that rely on the Middle East for roughly 60 % of their oil and 80 % of their gas imports. Clearing the backlog, however, solves only half of the problem. Shipowners and charterers remain wary of sending vessels back into a war zone; freight rates have spiked and insurers are reluctant to cover voyages.
Even under the best‑case scenario of a permanent peace deal, the region’s oil and gas flows will not quickly return to pre‑war levels. The blockade forced producers to shut in an estimated 7.5 million barrels per day (bpd) of output in March, including 2.8 million bpd in Iraq and 1.9 million bpd in Saudi Arabia.
Restarting giant oilfields and LNG plants is complex and costly. Many refineries, pipelines and loading terminals have been damaged by missile and drone attacks; repairs could take months or years, and the region faces shortages of specialised equipment and labour. Analysts at MST Marquee predict the global oil market could remain 3-5 million bpd tighter over the next few years as a result.
For the UK, the ceasefire’s fragility carries profound implications. Britain imports about half of its oil and roughly a third of its natural gas, much of which is linked to global benchmarks. While lower oil prices may ease short‑term inflation pressure, they could rebound sharply if the ceasefire collapses or if infrastructure repairs lag.
Businesses cannot bank on near‑term stability, and the government must continue planning for supply‑chain disruptions. The crisis also underscores the strategic value of domestic energy security and accelerated investment in low‑carbon alternatives that are less exposed to geopolitical shocks.
