How Will the Re-Opening of the Strait of Hormuz Affect Consumers?
The United States and Iran signed a 14 point MOU (Memorandum of Understanding) on Wednesday June 17th, 2026, which triggered the continuation of the 60-day negotiation window, allowing the toll-free re-opening of the Strait of Hormuz, with the US lifting its naval blockade of Iranian ports. Iran has reaffirmed its commitment not to procure or develop nuclear weapons, and has agreed to allow UN nuclear inspectors of the IAEA (International Atomic Energy Agency) back into the country.
Recently, analysts advised that millions of barrels of crude oil have been seen passing through the Strait of Hormuz with more ships and tankers signalling their intention to traverse the strait. The United States/Iran/Israel conflict saw Brent Crude spike in excess of $120p/bl (pre-conflict just under $73pbl), and recently, the price is sitting at circa $77.28p/bl. The drop in price is not only due to the re-opening of the Strait of Hormuz, but also due to slowing global demand and record production outside of OPEC.
However, households and other consumers should not celebrate just yet, as experts estimate that the initial energy shock from the conflict could see inflation increasing in Q3 of this year and remain elevated into 2027. According to analysts at Rystad Energy, exports of oil from the Persian Gulf could take until 2027 to reach pre-crisis levels and that is only if the agreement holds. Indeed, some analysts advise that it will take three months for 70% – 85% of lost production to resume, which will also rely heavily on spare capacity in Saudi Arabia and for the UAE (United Arab Emirates) to ramp up quickly once pipelines are clear. Analysts further advised that the timescale to reach 90% of pre-conflict volumes is up until 2028 or longer to reach full capacity, or longer for those facilities damaged during the war.
Therefore, consumers will find prices at the pumps for diesel and petrol remaining elevated for some time as will the cost of electricity. Gas prices may remain elevated for longer as experts advise it will take extended time to repair Persian Gulf LNG (Liquid Natural Gas) complexes such as Qatar, where it will take from three to five years to repair their damaged gas facilities at the Ras Laffan LNG complex.
