Why Oil Supply May Stay Tight for Months

The global oil market is underestimating the complexity of restoring Middle East crude production following prolonged disruptions in the Strait of Hormuz. While Brent prices have retreated to approximately $92 a barrel, roughly 11 million barrels per day remain offline, and a full recovery faces significant structural bottlenecks. Meaningful export recovery is unlikely before late July, hampered by the need to clear mines, reposition the global tanker fleet, and empty full storage tanks to allow oilfields to restart. Furthermore, nearly 5,000 of the 10,000 currently shuttered wells face technical restart constraints that could delay full capacity restoration until 2027. Although high inventories and strategic reserve releases previously cushioned the shock, these buffers are thinning just as Chinese demand is expected to rebound in September. Consequently, Brent forecasts remain elevated at $110 for the second quarter and $100 for the third quarter, reflecting a physical system that cannot simply return to normal with the flip of a switch.