HFI Research has stated that the oil market has passed its breaking point, which was projected around mid-April

The analysis argues that these inventory draws will occur regardless of any reopening of the Strait of Hormuz, driven by structural and logistical constraints. This comes amid notable uncertainty around the diplomatic efforts to resolve the US–Iran war.

HFI explained that even with a US-Iran peace deal, oil market recovery would be delayed by logistical bottlenecks. An estimated 160 million barrels of floating storage in tankers would begin discharging. However, transit and offloading alone would take 30–40 days, with tanker turnaround requiring an additional 20 days. 

Meanwhile, around 70 very large crude carriers (VLCCs) en route to load US crude for Asia face a much longer cycle. It would take 6–8 weeks for loading, 45–50 days for transit, and another 20–25 days to offload and return. 

“In total, we will not see meaningful tanker traffic back in the Strait of Hormuz from this entourage for at least 3 months,” the blog read. 

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STRAIT OF HORMUZ TRAFFIC COLLAPSES AS OPENING CLAIMS UNRAVEL

Traffic through the Strait of Hormuz has dropped to a near standstill after brief claims it had reopened quickly fell apart.

Iranian and US statements over the weekend suggested the key oil route was open, triggering… pic.twitter.com/oPEx2gP0qj

Onshore constraints in the Middle East further complicate the recovery. The region holds 600 million barrels in onshore storage. Producers need roughly 200 million barrels drained before they can restart output. 

That would take at least 100 VLCC. However, current tanker activity suggests this rebalancing may not occur until mid-to-late June at the earliest.

“Once the onshore crude storage drains, we need a steady flow of tankers coming to through the Strait of Hormuz to pick up crude. By this point, producers like Saudi, UAE, Kuwait, Qatar, Iraq, and Bahrain can restart. This process will take a few more weeks all but guaranteeing that the lack of supply continues,” HFI Research added.

The report highlighted that cumulative storage lost due to the closure already totals roughly 1 billion barrels, rising to 1.98 billion by the end of June.

According to HFI, given the limited commercially available crude to offset such losses, the market may require demand destruction to restore equilibrium. If the Strait remains closed beyond April, oil prices could move into uncharted territory, with traditional pricing mechanisms breaking down.

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