Iran War Concludes with Global Deterioration or Escalation Delayed Again

(SeaPRwire) –   The implementation of a fragile ceasefire was marked by ongoing explosions in Lebanon and conflicting declarations regarding Iran’s continued control over the vital Strait of Hormuz energy corridor.

According to geopolitical and energy analysts, the most probable outcomes are that Iran will gain greater influence over global energy markets than it possessed prior to the March conflict, or the current unstable agreement will only postpone further military escalation for a matter of days or weeks.

Bob McNally, a former White House energy advisor to George W. Bush and founder of Rapidan Energy Group, described a less probable “happy scenario” in which global energy trade normalizes—though supply chain issues would delay this until year’s end—and Iran is left in a long-term weakened and militarily diminished state.

“We think the odds favor this ceasefire either not ever sticking or unraveling if it does,” McNally stated, contending that the April 7 announcement of a two-week truce was ambiguous, unstable, and contradicted by Iran—hardly a justification for oil prices dropping nearly $20 per barrel overnight.

“The only thing we know for sure is the president called off a larger attack,” McNally said. “I am amazed at the market’s willingness to price in relief so willingly. While we do see a ceasefire as an ultimate end state, we don’t think we’re there yet, and we think this is going to get worse before it gets better.”

On April 7, hours after President Donald Trump issued messages filled with profanity threatening the annihilation of Iran’s “whole civilization” in one night, he declared a two-week ceasefire in return for reopening the narrow Hormuz passage, which facilitates the transit of roughly 20% of the world’s energy supplies. Iran consented to open the strait but only “via coordination with Iran’s Armed Forces and with due consideration of technical limitations.”

Iran stated it might continue levying tolls per vessel, whereas Oman, located on the opposite side of the strait, declared “no fees will be imposed”—presenting another contradiction.

Despite this, Israel, which expressed dissatisfaction with the ceasefire, persisted with attacks on Lebanon on April 8, and Iran maintained the strait’s closure while threatening to abandon the ceasefire agreement.

White House press secretary Karoline Leavitt said that if the ceasefire holds, Vice President JD Vance, special envoy Steve Witkoff, and Jared Kushner are scheduled to travel to Islamabad for direct negotiations with Iran on April 11.

What happens next

Rystad Energy chief economist Claudio Galimberti views a lasting ceasefire as the most likely outcome, though it will be fraught with difficulties. He anticipates Iran will maintain control over the strait for several months before any comprehensive, long-term agreement is finalized with the U.S. and oil-producing Gulf neighbors.

“The normalization of the Strait of Hormuz is still far, far away,” Galimberti told Fortune. “It’s a very fragile situation.”

He concurred that regular traffic through the strait is unlikely to resume before late 2026. In the interim, a more robust ceasefire could lead to the restoration of approximately one-third of the vessel traffic.

Shipments of oil, liquefied natural gas, agricultural fertilizer, semiconductor hydrogen, and petrochemicals fell to just 5% of normal levels in March, briefly recovering to nearly 10% for a few days in early April before halting again on April 8.

Rohit Rathod, a senior analyst at the Vortexa cargo tracking firm, reported that only a single oil tanker linked to Iran navigated the strait on April 8.

Significant challenges lie ahead. Galimberti noted that the strait must first be cleared of mines and the hundreds of vessels trapped for over a month. Subsequently, ships would need to restart their complex global logistical operations. Finally, nations like Saudi Arabia, Iraq, Kuwait, and the UAE would have to ramp up their oil and gas production—a process expected to take many months.

He added that oil prices, which dropped to around $94 a barrel from over $110 the previous day, may continue to decline but are likely to remain at least $10 per barrel above pre-March levels in the long term, partly due to increased tanker insurance costs.

“The political risk premium is going to be embedded for a long time,” Galimberti said.

Restoring the standard transit system for goods and commodities requires guaranteeing insurance availability, commercial trade financing, and the return of empty, inbound “ballasting” vessels.

Alan Gelder, senior vice president for refining, chemicals, and oil markets at Wood Mackenzie, stated that while the currently stranded ships will seek to depart quickly, restarting other traffic is considerably more difficult.

“[Inbound] ballasting vessels are unlikely to enter via the Strait of Hormuz any sooner than a ‘just in time’ logistics basis, at risk of becoming trapped if hostilities resume,” Gelder added.

Regarding liquefied natural gas (LNG) exports, primarily from Qatar, shipments could recommence by the end of summer. However, over 15% of its export capacity is expected to remain inoperative for years due to significant damage from Iranian attacks.

McNally observed that investors and energy traders are overreacting to the ceasefire, as indicated by a sharp rise in stock markets and a corresponding fall in oil prices.

“The market was eager to hear a ceasefire had been reached. And the market continues to underappreciate the gravity and the risk of a prolonged disruption from Hormuz,” McNally said. “I still think there’s an unwarranted, large reservoir of hope and optimism that you see reflected in prices today.”