Our current assumption is that the opening will take place in July. This is based on a confluence of factors: the US driving season starts in May and peaks in July, US GDP and inflation data for Q2 will be published around July/August, and China has oil reserves of 1.2 billion barrels sufficient to cover imports through the Strait until the end of October.

The most important bit for the oil markets is the Strait of Hormuz. The risk is binary; it is very difficult to predict.

The risk is binary. If it reopens early, the price will be lower. If it opens later, the price will be higher. It is very difficult to predict.

The degree of uncertainty will remain high, and the geopolitical risk premium will stay in the oil price. If it reopens in July, we expect Brent to average between $100 and $110 in July, then fall to around $80 in August, and roughly $70 from September.

The reason we believe the price will fall quickly and sharply is threefold: 1) production in the Middle East will ramp up quickly, 2) there has been no material damage to oil infrastructure, and 3) the supply response from OPEC+ will be strong, ramping up to maximum production capacity.

We started the war at 8.2 billion barrels of oil stocks, which is substantial. With the IEA drawdown of 400 million barrels, we would be down to 7.8 billion. If the Strait remains closed until July, we do not anticipate another release, but it is not impossible. 8.2 billion is sufficient to cover all volumes that transited the Strait before the war for over a year.

China's oil reserves of 1.2 billion barrels are sufficient to cover their volumes through the Strait until the end of October. 91% of the oil that transits the Strait goes to Asia.