Crude oil prices began the week with a strong rally, as West Texas Intermediate (WTI) jumped by about $4 from Friday’s close of around $91.75 to $95.70, testing levels above $96.00. This surge followed US President Donald Trump’s rejection of Iran’s latest peace proposal, which included demands for war damages compensation and a reclaiming of Iran’s sovereignty over the Strait of Hormuz. Trump described Iran’s response as 'totally unacceptable,' diminishing hopes for a swift end to the conflict and the reopening of the critical shipping route. The ongoing tensions have kept the market on edge, with a fragile ceasefire persisting despite Iranian accusations of US attacks on Iranian oil tankers over the weekend. Israeli Prime Minister Benjamin Netanyahu stated that Iran’s war would not end until Iranian enriched uranium is removed, a condition Tehran has completely rejected [1].
Societe Generale analysts highlighted that the eventual reopening of the Strait of Hormuz would trigger a double oil supply shock in an already tightening market. They explained that both the resumption of tanker traffic and the release of previously constrained upstream supply would occur simultaneously. However, they cautioned that logistical challenges, such as safety checks, system verification, and gradual ramp-ups, mean that physical relief for end-users would lag the headline reopening by several weeks. Kuwait has estimated that restoring full output could take three to four months even under the best political circumstances. Societe Generale projects that, under a base case scenario of a mid-May reopening, tangible end-market relief would not be felt until June 24th, with the best-case scenario being June 18th and the worst stretching to July 5th [2].
On the macroeconomic front, strong US Nonfarm Payrolls data has reduced pressure on the Federal Reserve to lower borrowing costs, suggesting a tighter policy for a longer period. This could restrain consumption and weigh on prices. Meanwhile, Chinese trade data points to stronger economic activity and higher oil demand, further supporting the crude rally [1].
Both sources emphasize that while oil prices react immediately to news about the Strait of Hormuz, the actual improvement in physical supply will be delayed due to logistical and operational constraints. This timing mismatch poses a central risk for both policymakers and markets [2].
CONCLUSION
WTI oil prices have surged amid renewed geopolitical tensions and uncertainty over the reopening of the Strait of Hormuz. While market prices respond quickly to headlines, analysts warn that physical supply relief will be delayed by several weeks to months due to logistical challenges. The situation remains highly fluid, with significant risks for both oil markets and policymakers.