RBC Capital Markets dismisses hopes for Strait of Hormuz reopening as ‘magical thinking’ Proactive uses images sourced from Shutterstock
The Canadian bank warns markets are too optimistic about a June grand reopening of the vital oil shipping lane.
The commentary landed on Friday as mining and commodity stocks across London came under heavy selling pressure, with Fresnillo, Antofagasta, and Anglo American all falling sharply after President Trump dismissed Iran’s latest peace proposal and warned that ceasefire prospects were on “life support.”
Gold fell more than 2.5% on the day to around $4,566 per ounce, while Brent crude pushed above $108 a barrel, underscoring the conflicting forces at work across commodity markets.
In the note, titled “No Easy Passage”, RBC said it was very sceptical of an imminent reopening of the Strait of Hormuz, arguing that the emerging consensus around a June resumption of shipping is based on a tenuous assumption that there is a straightforward policy lever that can be pulled once the economic pain becomes unbearable.
The optimistic case appears to rest on either a negotiated settlement or a unilateral US exit, but RBC said unresolved sticking points over Iranian enrichment capabilities and uranium stockpiles make a diplomatic resolution unlikely in the near term.
Even if the nuclear issues were resolved, RBC argued that Iran’s Islamic Revolutionary Guard Corps (IRGC) would seek to maintain control over the Strait, which has arguably become more strategically important to re-establishing deterrence than the nuclear programme itself.
Any scenario in which Iran determines which ships navigate the waterway would result in flows appreciably below pre-war levels, RBC said, noting that Western companies would be wary of paying a toll to a sanctioned entity and that the risk of renewed maritime attacks would disincentivise an immediate return.
On oil, RBC commodity strategists noted that physical crude differentials have softened recently, helped by weaker appetite from Asia and the release of US strategic petroleum reserve volumes, but said the physical market would likely strengthen heading into summer demand season as supply outages persist and inventories draw down.
On gold, the bank said India had more than doubled its import tariff from 6% to 15% to protect its currency amid the conflict, following government efforts to persuade citizens to pause gold purchases.
Rising US Treasury yields after this week’s inflation data added further pressure, but RBC said it still expected uncertainty to turn more supportive of the gold price eventually.
RBC’s middle scenario for US natural gas prices sees Henry Hub averaging $3.51 per million British thermal units this year, rising to $3.84 in 2027 as LNG export growth and data centre power demand tighten the balance.