Countdown for oil: the strait of Hormuz must reopen before the end of April

By Kerstin Hottner, Head of Commodities and Regina Hammerschmid, Commodities Portfolio Manager at Vontobel

We are now approaching two months of conflict in the Middle East. Rather than reviewing the recent chain of events, we focus on the current reality and its implications for crude oil and refined products. Approximately 12 to 13 million barrels per day of upstream production in the Middle East have been shut in (equivalent to about 12% of global supply), along with around 6 million barrels per day of reduced refinery activity linked to the conflict across the region and parts of Asia. These are tangible, daily supply losses that are gradually depleting global reserves. The scale of this disruption is staggering. However, a key question remains: why have oil futures not surged, but instead remain around $100 per barrel?

Key factors keeping oil prices in check (for now):

1. Market optimism about a short-lived conflict
   Investors appear to remain confident that the conflict will be brief. Over the past decade, investment strategies that quickly discounted geopolitical risk premiums in oil prices have often performed well, reinforcing this belief.
2. Increase in global oil inventories
   At the start of 2026, global oil inventories were relatively high, thanks to strong supply growth from both OPEC and non-OPEC producers. These inventories are now acting as a buffer. Notably, the volume of oil stored at sea—largely under sanctions—has risen significantly since the third quarter of 2025. The temporary easing of sanctions on Iranian and Russian oil has provided short-term relief, releasing around 4–5 million barrels per day (mb/d) to China and India.
3. Alternative routes bypassing the Strait of Hormuz
   Despite the challenges, oil is still leaving the region. Approximately 6–7 million barrels per day are being exported from Saudi Arabia and the UAE via terminals on the Red Sea, avoiding the Strait of Hormuz, while another 2 million barrels per day are being shipped from Iran via tankers.
4. Strategic Petroleum Reserve (SPR) releases
   Coordinated releases from strategic petroleum reserves, amounting to 2–2.5 million barrels per day, have also helped cushion the immediate impact of the supply crisis.

Conclusion
Even if the Strait of Hormuz reopens, some producers will take months to restore full production capacity. Saudi Arabia may recover relatively quickly, but countries such as Kuwait and Iraq are likely to face prolonged delays. While some Middle Eastern reserves may be drawn down in the meantime, only Kuwait has built up significant stockpiles in recent weeks. It is encouraging that a second round of talks between the U.S. and Iran is being planned in Islamabad, following initial discussions in early April. This is a positive development, but the urgency cannot be overstated. The Strait of Hormuz must reopen before the end of April, as the world is running out of time to avoid a much more severe crisis.