Hormuz shipping rebounds faster than feared as oil prices ease

The disruption many feared in one of the world's most important shipping lanes is fading faster than expected, easing the pressure on oil markets that built up during June's flare-up between Washington and Tehran.

A faster-than-expected reopening

Traffic through the Strait of Hormuz — the narrow waterway through which roughly a fifth of the world's oil passes — is returning toward normal more quickly than analysts had projected, Morgan Stanley said. The strait was disrupted during last month's military escalation, when fears of a prolonged closure helped push prices higher. Those fears have largely not materialized.

Morgan Stanley trims its forecast

Citing the quicker reopening, along with ample supply and softer demand, Morgan Stanley lowered its forecast for Brent crude to around $75 a barrel — its second downward revision in roughly two weeks, as the bank set out in a research note. The bank said attention has shifted back toward an expected glut, forecasting a sizable global oil surplus in 2027 as production outpaces consumption.

Prices settle after the spike

Crude prices have come well off the highs reached at the peak of the tensions. Brent was trading in the low $70s a barrel and U.S. West Texas Intermediate around $70 in late June, CNBC reported — a far cry from the surge toward $100 that a sustained Hormuz blockade had threatened. Brent fell roughly 30 percent over the second quarter, its steepest quarterly drop since 2020, as the feared supply shock receded.

A fragile calm

The diplomatic backdrop remains delicate. The United States and Iran agreed to halt strikes and are preparing to meet, with the planned venue — a session in Qatar — itself a point of contention that newsparlor has reported. Iran had threatened to disrupt Hormuz during the standoff, but shipping continued. Both sides have signaled they could escalate again if the understanding breaks down, Axios reported.

Why it matters

Because Hormuz is so central to global energy supplies, even the threat of a closure can ripple through fuel prices worldwide; an actual, lasting shutdown would have hit consumers and economies hard. For now, the faster-than-expected return to normal offers relief — though analysts caution, and Morgan Stanley's repeated revisions underline, that forecasts could change quickly if the calm proves short-lived.