Reports indicate that a deal to reopen the Strait of Hormuz is "imminent." The strait, which handles roughly 20% of daily global oil consumption, is one of the world's most critical energy chokepoints. In response to the reports, macroeconomic research firm Capital Economics has identified five factors to monitor in the weeks and months ahead.

1. Tanker Traffic Through Hormuz and the Wider Middle East

Traffic through the Strait of Hormuz slumped to a near-standstill following the resumption of fighting after a prior memorandum of understanding (MoU), and has remained well below typical levels in recent weeks, Capital Economics noted. The situation is further complicated by "dark" transits, in which ship operators disable their transponders.

The firm anticipates a temporary surge in departures once the waterway reopens. However, because less oil is currently trapped in the Gulf compared to June, "the exodus will be smaller and so prices won't fall as far as they did following the first MoU agreement."

Capital Economics also cautioned that any new U.S.-Iran deal could collapse again, particularly when negotiations shift to Iran's longer-term nuclear ambitions. The firm further highlighted that the Houthi blockade of Saudi exports through the Bab el-Mandeb Strait demonstrates that risks to Gulf supply extend beyond Hormuz.

2. Pace of Recovery in Gulf Energy Output

Middle East oil exports in July remained approximately 9 million barrels per day below pre-war levels. Nonetheless, oil executives have generally indicated that most pre-war crude production and refinery capacity could be restored within a few months.

Qatar Energy's chief executive stated that 17% of the country's liquefied natural gas (LNG) production capacity will be offline for two to three years due to Iranian strikes, though the North Field expansion project could offset a portion of that loss. Qatar is among the world's top three LNG exporters, meaning prolonged outages have implications for global gas supply well beyond the Gulf region.

3. Commercial Oil Stock Levels

Even with a swift reopening of the strait, commercial oil stocks could still "flirt with severely depleted levels" in the third quarter, the firm wrote. The 400 million barrels of emergency stocks released by International Energy Agency (IEA) members—drawn from government-held reserves such as the U.S. Strategic Petroleum Reserve—has offset supply losses at a rate of 2-3 million barrels per day, but that buffer is projected to be exhausted by early-to-mid September.

"Accordingly, either oil exports from the Middle East would have to rise by 2-3mn bpd over the next month, or the IEA would have to announce another release of strategic reserves, to avoid tightening the global oil market further," Capital Economics said.

4. Offsetting Demand-Side Factors

The firm pointed to several offsetting factors, including a sharp decline in China's crude imports and an increase in U.S. petroleum exports. China is the world's largest crude importer, so sustained reductions in its purchases meaningfully alter the global supply-demand balance. One tail risk identified is that frustration from Trump over gasoline prices could result in a U.S. ban on oil product exports.

"While our sense is that China could keep imports around current levels for many more months, possibly into 2027, much will depend on the willingness of policymakers and firms to run inventories down to low levels," the firm wrote.

5. Seasonal Natural Gas Demand Dynamics

Seasonal natural gas demand patterns mean that European gas storage levels are lower than in recent years heading into winter. As a result, any price relief from a Hormuz reopening will be limited in the near term, Capital Economics said.

The firm's baseline forecast projects Brent crude—the benchmark for roughly two-thirds of the world's internationally traded crude—ending the year at $75 per barrel, with EU natural gas prices remaining near current levels of €50-55 per MWh through the winter.

Source: Investing.com