Strait of Hormuz oil backlog could take weeks to clear after US-Iran deal

Oil prices saw a slight decrease on March 18, 2024, despite analysts warning that a backlog in the Strait of Hormuz could take weeks to clear following a reported deal between the United States and Iran. The potential easing of tensions, which had led to a significant buildup of oil tankers, offers a glimmer of hope for restored maritime trade. However, market watchers emphasize that the recovery of normal oil flow rates will be gradual and the route remains susceptible to future disruptions. The Strait of Hormuz is a critical chokepoint for global oil supply, with approximately 20% of the world's total petroleum liquids consumption passing through it annually. Any interruption to this flow can have immediate and substantial impacts on global energy markets, leading to price volatility. The exact terms of the reported US-Iran deal have not been fully disclosed, contributing to the uncertainty surrounding the timeline for resolving the current backlog. Experts suggest that even with an agreement, the logistical challenges of rerouting and resuming normal shipping operations will require considerable time and coordination.