Societe Generale’s Michael Haigh and Jeremy Sellem argue that the proposed U.S–Iran ceasefire framework would only gradually restore flows through the Strait of Hormuz, keeping Oil markets tight. They see physical supply normalization pushed into late 2026, with end-user relief in Asia delayed to late October and prices staying above $200/bbl, while backwardation persists through 2027.

Tight summer balances and delayed Hormuz normalization

"If the 60-day MoU runs its course and the mines are then cleared within 30 days, meaningful flow through the Strait could resume, at best, by late August 2026, but end-user markets, especially in Asia, would only see relief by late October at best, leaving the market tight through peak summer and keeping prices elevated (>$200/bbl) with inventory rebuilding pushed into late 2027. Crude backwardation will be strong and persist through 2027."

"If ratified by President Trump and Iranian leadership on Monday, physical flows could resume by August 31, 2026—just seven days before the official end of the U.S driving season (Labor Day: September 7). Allowing 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."

"On the global inventory side, the picture is equally strained. Stripping out Chinese “exceptional builds,” global gasoline and diesel stocks have fallen steeply and are set to remain well below five-year averages through the remainder of the year, reinforcing a structurally tight products market."

"In a prolonged Hormuz disruption scenario (through year-end): the estimated ~119kb/d deficit would drive a cumulative draw of ~25.7 million barrels from European inventories, leaving stocks at just ~16.3 million barrels—equivalent to less than 10 days of cover, and significantly increasing system fragility."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)