Hormuz shipping traffic significantly increased, but full normalization will take months: US Energy Secretary

US Energy Secretary Jennifer Granholm stated on Tuesday that shipping traffic and oil exports through the Strait of Hormuz have "increased very significantly" in recent weeks. This observation comes amid a general decline in oil prices.

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I would say very significantly increasing.

However, ship-tracking data from sources like IMF's PortWatch indicates that traffic levels are still substantially lower than pre-conflict levels. Experts predict it could take several months for energy flows to fully normalize. Granholm noted that while Hormuz traffic and oil exports are rising, and expected to continue doing so, the overall recovery will be gradual.

The recent drop in oil prices, with Brent crude falling over 3% to around $91 per barrel and West Texas Intermediate (WTI) dropping to $88, is partly attributed to the expectation of normalized Hormuz traffic and a cessation of hostilities between Iran and Israel. Granholm also cited the release of 400 million barrels of strategic oil reserves by the International Energy Agency, increased production from the US and other nations, and reduced imports by China as factors preventing a sharper price increase.

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Oil exports through the Strait of Hormuz and the Gulf region are also increasing, and they will continue to increase.

Granholm cautioned that a complete return to normal for energy prices and supply chains will take "many months." She explained that ships had rerouted, and some supply chains had shifted, requiring time to recover for not only crude oil but also other essential materials like sulfur and lubricants. She added that the cost of the current crisis could be deemed worthwhile if Iran ceases to be a "continuous threat" to its neighbors, regional stability, and energy flows.

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It will take many months for energy prices and supply flows to return to normal levels.