Strait of Hormuz faces four challenges for full shipping recovery: S&P

The full reopening of the Strait of Hormuz to commercial shipping faces significant hurdles, even with a potential peace agreement between the U.S. and Iran. S&P Global Ratings identifies four primary challenges: restoring transit for merchant vessels after more than three months of conflict, repairing infrastructure damaged by attacks, managing high insurance premiums and other maritime restrictions, and overcoming companies' reluctance to resume operations until the situation clarifies.

According to S&P Global Ratings, a framework agreement between the U.S. and Iran, expected soon, aligns with their forecast that problems in the Strait's commodity traffic will begin to ease in the second half of 2026. However, the agency warns that their base scenario still anticipates only a gradual recovery of energy and other product flows. "We believe there is a possibility of continued operational challenges and uncertainty until a comprehensive agreement is finalized," the report states.

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We believe there is a possibility of continued operational challenges and uncertainty until a comprehensive agreement is finalized.

The recovery of energy flows post-reopening is expected to be gradual. Operational bottlenecks stemming from prolonged conflict, damaged infrastructure, insurance limitations, and lingering risk aversion mean that a sustainable return to pre-war levels will take time. S&P Global Ratings estimates that oil shipment volumes in the second half of 2026 would average about three-quarters of pre-war levels, indicating a significant supply deficit despite nominal peace.

Even with an official agreement, the sustainability of safe passage through the Strait remains a critical question. Without a robust enforcement mechanism, the risk of recurring escalations, termed "resurgences," is present. Historical precedent suggests that a temporary ceasefire could prove fragile. In the coming weeks, markets will scrutinize adherence to the commitments made, and progress on addressing underlying issues such as Iran's nuclear ambitions, its support for regional proxies, and its missile program will be crucial.

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The history shows that a temporary ceasefire could prove fragile.