The Science Behind Why Oil Prices Can't Come Down Quickly Even If Hormuz Reopens

Even if the Strait of Hormuz opens tomorrow, oil prices won't fall back to pre-war levels for months. Here is the science and economics of why energy markets don't reverse quickly.

The intuitive assumption — that if the crisis that caused prices to rise is resolved, prices will fall — is approximately correct as a direction of travel but dramatically wrong as a description of speed. Energy markets do not have a reverse gear that operates at the same speed as the forward one.

When the Strait of Hormuz was effectively restricted from late February 2026, the transmission mechanism from geopolitical event to price movement was near-instantaneous. Oil futures traders, who process information faster than any other financial market participants, repriced the global oil supply outlook within minutes of the first reports emerging. Within 72 hours, crude benchmarks had moved 15 percent. Within two weeks, the movement exceeded 25 percent.

The reverse transmission, when it happens, will be materially slower. There are four reasons for this, all grounded in the physics and logistics of energy supply chains rather than in market psychology.

First, the supply chain disruptions created by Hormuz restriction are not reversed instantaneously when the strait reopens. Tankers that diverted around the Cape of Good Hope are not immediately repositioned. LNG cargoes that were rerouted to Asian buyers cannot be immediately redirected to European ports that they had passed weeks earlier. The rebalancing of global energy flows takes weeks of actual voyage time, not market hours.

Second, inventories at European destinations have been drawn down during the restriction period. Rebuilding those inventories requires sustained above-average import volumes over weeks, which means European buyers will continue to bid competitively for cargoes even after the immediate threat has lifted.

Third, the risk premium embedded in prices is slow to unwind because markets are uncertain about the durability of any resolution. If the Hormuz situation could escalate once, it could escalate again. That uncertainty is worth money — specifically, it is worth the premium above pre-crisis prices that persists as long as the uncertainty persists.

Fourth, the inflationary effects that the oil price spike has already introduced into supply chains — through transport costs, packaging costs, and manufacturing energy costs — are not reversed by a price fall. They are already embedded in contracts, already in invoices, already in the system.