Friday the Strait will open. ~100 million barrels of oil and 20,000 seafarers stranded north of Hormuz will exit quickly. But restarting 11-12 million bpd of offline production requires draining local storage first. 80% back in 2 months, final 10-20% takes 3-5 months.

Ships were subleased to other regions. Getting them back takes time. Safety, insurance, and crew concerns must be addressed.

The oil market will have a multi-year hangover. Global inventories have drawn ~1 billion barrels; governments will refill them, boosting demand. Iran proved it can close the Strait at will, adding a lasting geopolitical premium. Mid-cycle prices will rise $5-10.

20% of world oil supply and all spare capacity is north of Hormuz. Some producers will build new pipelines to circumvent.

The coming weeks/months will be very volatile due to undecided negotiations. Pre-war mid-cycle Brent was ~$70. Now probably ~$80. US shale growth is slowing as companies drill tier-2 wells. Extra production from UAE, Venezuela, Argentina helps, but structurally higher prices for 2-3 years.

US shale was the predominant incremental supplier. The message from Texas is tougher geology. Even with high prices, US production won't grow much.

Very high oil prices ($150) create demand destruction and can tip the global economy into recession (5% of GDP). The good news of the Strait reopening is it moderates the oil price, bringing down long bond yields and recession risk, creating a healthier long-term demand scenario.