Hormuz Reopening Won't Mean Immediate Normalization

Downstream fuel markets will adjust far more slowly. Damage done to refineries for jet fuel will limit production; using alternative facilities is difficult because of strict specifications. In periods of scarcity, jet fuel is routinely deprioritized in favor of gasoline or diesel. With refinery repair timelines extending well beyond the normalization of shipping, aviation fuel supply and pricing are likely to remain dislocated.

Natural gas markets face similar headwinds. Damage to infrastructure in one of the world's largest producing regions implies a recovery path to full production that is measured in years, not months.

The stress may not stop with energy. Disruptions to fertilizer shipments, stemming from constrained gas supply or persistent shipping bottlenecks, risk lingering spillovers into agriculture. Even short-lived interruptions can reduce crop yields, create shortages and push up food prices. And as we have noted here, emerging shortages in critical inputs such as helium could strain industrial value chains.