The Strait of Hormuz has been closed since early April, disrupting almost one-fifth of global oil and LNG shipments. ExxonMobil’s CEO Darren Woods shared during the company’s Q1 2026 earnings call that although the key shipping lane is expected to reopen, it will take one to two months for oil flows to get back to full capacity.
Strait of Hormuz: A key Energy Channel
At its narrowest, the strait spans roughly 21 miles but carries about 20% of the world’s oil and LNG trade. The prolonged closure, triggered by rising tensions with Iran, has sent oil prices skittering, with May 1 prices fluctuating between $101 and $108 per barrel. Woods pointed out that markets have yet to fully factor in the extent of the disruption.
Reopening the waterway won’t suddenly restore normalcy. Shipping routes need repositioning, insurance risks must be reassessed, and buyers have to regain trust in the strait’s stability before flows can normalize.
Market Impact of the Recent U.S.-Iran Deal
In mid-June, a memorandum of understanding between the U.S. and Iran promised to reopen the strait and extend the ceasefire by 60 days. Oil prices reacted by easing, dragging energy stocks, including Exxon’s, down. While higher oil prices generally boost Exxon’s earnings, a price drop after de-escalation cuts into potential profits even if the company’s fundamentals stay solid.
The ceasefire extension places a time limit on calm; if upheld, markets might breathe easier for the next couple of months. But any collapse could soon reignite volatility. Investors now focus less on if the strait reopens, more on how long that status holds and how smoothly oil flows normalize during the months ahead.
This material is for informational purposes only and does not constitute financial advice.
