Societe Generale analysts Michael Haigh and Jeremy Sellem report that the proposed U.S.–Iran ceasefire framework would only gradually restore oil flows through the Strait of Hormuz, resulting in a continued tight oil market. They project that physical supply normalization will be delayed until late 2026, with end-user relief in Asia not expected until late October at the earliest. During this period, oil prices are forecasted to remain above $200 per barrel, and market backwardation is expected to persist through 2027 [1].
The analysts detail that if the 60-day Memorandum of Understanding (MoU) is completed and mines are cleared within 30 days, meaningful flow through the Strait could resume by late August 2026. However, due to the time required for transit, discharge, customs clearance, inspection, refining, and downstream distribution, crude and products would likely only reach end-consumers in stressed Asian markets by late October. This timeline means the market will remain tight through the peak summer season, keeping prices elevated and delaying inventory rebuilding until late 2027 [1].
On the inventory front, Societe Generale notes that, excluding Chinese 'exceptional builds,' global gasoline and diesel stocks have fallen sharply and are expected to stay well below five-year averages for the rest of the year. This reinforces the structurally tight products market. In a scenario where the Hormuz disruption continues through year-end, the estimated deficit of approximately 119,000 barrels per day would result in a cumulative draw of about 25.7 million barrels from European inventories, leaving stocks at just 16.3 million barrels—less than 10 days of cover and significantly increasing system fragility [1].
CONCLUSION
Societe Generale forecasts a prolonged period of tight oil markets and elevated prices due to the gradual restoration of flows through the Strait of Hormuz. With inventories expected to remain low and relief for end-users delayed, the market faces heightened fragility and sustained upward price pressure.