Ron Bousso

Oil markets are increasingly pricing in a prolonged disruption to shipping through the Strait of Hormuz rather than a short-lived supply shock. Failed diplomacy between the United States and Iran, attacks and blockades have sharply reduced reported regional oil flows, although opaque shipments by so-called dark tankers make the true scale of supply losses uncertain. Iran faces severe inflation and falling exports, while the United States confronts higher gasoline prices and political pressure. Tight refining capacity, depleted inventories, rising tanker rates and threats to alternative routes are reinforcing elevated prices, raising the prospect that oil markets and global trade will remain structurally disrupted well into next year.

Global refining capacity remains constrained by disruptions from the Iran conflict, Russian refinery damage, and reduced Asian refinery activity, leaving fuel inventories at multi‑year lows despite recovering crude supplies. The United States, which temporarily offset global shortages, is facing declining stockpiles and weakening export capacity. Record refining margins signal severe supply tightness as renewed instability in the Strait of Hormuz curtails product flows. With major refining hubs impaired and summer fuel demand rising, restoration of global output appears unlikely, raising the risk of demand destruction and broader economic strain.