Oil Prices Fail to Reflect Reopening Reality

The Strait of Hormuz has been declared open since the war, but crude oil prices have yet to reflect this. Brent and West Texas Intermediate (WTI) have drifted back down after briefly spiking up.

Despite the public announcement, only 14 vessels crossed the strait on Tuesday, which is roughly 12% of the pre-war baseline of around 120 vessels per day. Cargo-tracking data confirms that this pickup from the shutdown is still far from normalisation.

The physical count of ships crossing the strait is a stark contrast to the market's expectations, as Brent sits at $87 and WTI at $81, both roughly 25% above their pre-war levels. This premium remains despite the significant reduction in traffic.

A closer look at the data reveals that only 11 out of the 14 vessels used the Iranian-approved route, while none used the traditional central passage. This is not a strait reopening as initially thought but rather a corridor operating within the strait on terms set by Iran.