Why the Strait Matters So Much

The Strait of Hormuz is the narrow channel separating Iran from the Arabian Peninsula, and it has long been regarded as the single most important chokepoint in global energy markets. A substantial share of the world’s seaborne crude oil and a significant proportion of global liquefied natural gas exports, much of it from Qatar, pass through this waterway every day. When fighting escalated and the Strait was effectively closed to commercial shipping, the impact was immediate and severe: oil production in Gulf states was curtailed, Qatari LNG exports were disrupted, and benchmark prices spiked sharply as buyers around the world scrambled to secure alternative supplies.

How Prices Have Moved So Far

Before the conflict began, Brent crude was trading at around $66 to $70 a barrel. At the height of the disruption, prices briefly touched the $100 mark, with some forecasters warning of triple-digit spikes if the blockade dragged on. UK wholesale gas prices followed a similarly volatile path, climbing by around three-quarters in the space of a few weeks and at one stage reaching levels not seen in years. Since then, prices have eased considerably each time progress towards a ceasefire has been reported, only to bounce back when talks have stalled or fresh strikes have taken place elsewhere in the region. That pattern of advance and retreat has made the market unusually difficult to predict, even for experienced energy buyers.

With the latest agreement now in place and the Strait due to reopen, both oil and UK gas benchmarks have fallen back from their peaks. However, analysts are clear that current levels remain above where they stood before the conflict began, and that a full return to pre-crisis pricing is far from guaranteed.

Why Relief Is Likely to Be Gradual Rather Than Immediate

Several factors point towards a slow and uneven path back to normal, rather than a sudden drop in prices. Tanker traffic through the Strait collapsed dramatically during the crisis, and rebuilding normal shipping patterns will take time as vessels that were rerouted around southern Africa make their way back, insurance premiums for the region remain elevated, and operators wait for confirmation that mine-clearing operations have been completed safely. Industry estimates suggest oil prices alone could take several weeks to stabilise even with the Strait formally open. Qatar’s LNG facilities, which were knocked offline during the fighting, also need time to restart production at scale.

There is also the question of durability. The current arrangement has been described by some commentators as closer to a temporary truce than a lasting peace settlement, and energy markets remain highly sensitive to any signs of renewed tension. A single setback, whether a stalled negotiation or an isolated incident at sea, has repeatedly been enough to send prices climbing again over the past few months.

For UK businesses specifically, there is an added complication in how regulated price movements work their way through to consumers. Ofgem’s price cap, for example, is calculated using a three-month observation window of wholesale prices, meaning that the spike seen earlier in the year is still being factored into upcoming price periods even as spot prices ease. Commercial energy contracts work differently from the domestic cap, but the same underlying principle applies: wholesale volatility takes time to filter through to the rates suppliers offer, and the window during which more competitive deals become available can be narrow and unpredictable.