A freight forwarder has joined chemical executives in warning that traffic through the Strait of Hormuz will require several months to return to normal, contingent on the United States and Iran maintaining their latest peace agreement, according to a report by ICIS.
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The strait serves as a major conduit for the world’s fuel, feedstock, and plastics, and delays in its reopening are expected to keep prices elevated. Over the past month, demand destruction has exerted a bearish influence on chemicals pricing, yet many product prices remain above pre-conflict levels despite the current downtrend.
Once the strait reopens, repositioning vessels will take time due to the distances involved in traveling to and from the Persian Gulf. Lynn Stacy, managing director at freight forwarder OEC Group Liquid Logistics Solutions, explained in an interview with ICIS that moving a container ship is not like moving a speedboat. A tanker carrying crude from the Middle East can take four to six weeks to reach its destination, after which the oil must be offloaded into storage. A refinery then processes the oil, and the resulting products must go back into storage, at which point logistics begins again.
During the conflict, OEC Group successfully redirected Persian Gulf shipments through the Red Sea, initially landing at the port of Jeddah in Saudi Arabia. When Jeddah became congested, shipments were diverted to King Abdullah Port. Once on land, products were shipped by truck, which increased logistics costs. However, customers involved in drilling and oil production were willing to pay the premium, as the cost of shutting down for one day greatly outweighs the additional logistics expenses.
It remains unclear how much damage Middle Eastern infrastructure sustained, Stacy said. Damage to storage could create a bottleneck for refiners, who need a place to store their output. As storage runs out, refiners reduce operating rates, and run rates could remain depressed until sufficient storage capacity is available.
Stacy indicated that if the strait opened immediately, supply chains could return to normal sometime in the first quarter of 2027. His expectations align with those of chemical executives who have also warned that supply chains will take months to recover. LyondellBasell CEO Peter Vanacker told ICIS that the industry assumption is that the situation will have a very long tail, taking much longer than weeks, months, or quarters to balance out. Dow CFO Jeff Tate also expects a months-long process due to the sequence of events required before traffic returns to normal.
Stacy warned that if fighting resumes, traffic would seize up, as no ocean carrier would risk sending a vessel through the strait again. In response to the uncertainty, Stacy said his clients have been shipping as much as they can as fast as they can, aiming to make as much money as possible because the situation could stop abruptly.