Why Does the Delay in US-Iran Ceasefire Still Fail to Stabilize the Oil Market? Structural Shocks in the Crude Oil Market Amid the Strait of Hormuz Crisis

On the afternoon of April 21, 2026, U.S. President Trump announced on his personal social media platform that, at the request of the Pakistani Army Chief and Prime Minister, the U.S. would temporarily suspend military strikes against Iran and extend the ceasefire. However, this seemingly easing diplomatic signal did not cause significant fluctuations in the crude oil market—by the close of that day, U.S. WTI crude futures were at $89.12, up 2.39% for the day; Brent crude was at $92.87, up 2.72%. The market has shown a clear insensitivity to the words “ceasefire.”

Fundamentally, the core pain point in the oil market has shifted from “whether geopolitical negotiations can succeed” to “whether the physical supply chain can be restored.” Even if the U.S. and Iran shake hands in the coming weeks, the over-billion-barrel supply loss accumulated from the Strait of Hormuz disruptions will not automatically be replenished by a statement alone.

Ceasefire Extension and Blockade Coexist

According to a statement released by Trump on April 21 local time, the U.S. will, at Pakistan’s mediation request, temporarily halt military strikes against Iran and extend the ceasefire until Iran submits a unified negotiation plan and negotiations are completed, “regardless of the outcome.” Meanwhile, U.S. forces will continue to enforce a maritime blockade on Iran and maintain military readiness.

The core message of this statement can be summarized in three points: military strikes are paused, the maritime blockade remains in place, and the negotiation initiative is handed over to Iran. Market interpretations quickly split into two camps: optimists see this as a crucial step to avoid full-scale war, while pessimists point out that “ceasefire without navigation” means maintaining the status quo, with supply gaps continuing to widen.

As of April 22 during Asian trading hours, data from Gate shows U.S. crude futures (XTIUSDT) at $89.12, up 2.39% over 24 hours; Brent crude futures (XBRUSDT) at $92.87, up 2.72%. Prices remain high near the $90 mark, far from the pre-conflict central range of about $70–75.

From Negotiation Breakdown to Ceasefire Deadlock

Reviewing the evolution from late February 2026 to now, the timeline clearly illustrates the transition of the oil market from “event-driven” to “structural-driven”:

February 28: The last oil tanker passes through the Strait of Hormuz. According to JPMorgan analysis, this tanker is expected to reach its destination around April 20, marking the complete depletion of oil inventories in the transportation chain that had entered the global supply network before the Strait’s closure.

March: Global oil supply drops to 97 million barrels per day, a sharp decline of 10.1 million barrels/day from the previous month. OPEC+ production decreases by 9.4 million barrels/day to 42.4 million barrels/day. The monthly average price of Brent crude hits $99.6 per barrel, a 52.66% increase for the month, closing at $118.4 at month-end.

Late March: The International Energy Agency (IEA) coordinated the release of 400 million barrels of strategic petroleum reserves among 32 member countries, far exceeding the 183 million barrels released after the 2022 Russia-Ukraine conflict. The release temporarily suppressed prices but failed to reverse the trend of inventory depletion.

Early April: Rumors of a brief reopening of the Strait of Hormuz triggered algorithmic large-scale long liquidations, causing WTI to drop over 11% in a single day. The Strait then closed again, and prices rebounded swiftly.

April 12: The first direct negotiations between the U.S. and Iran in Islamabad broke down. President Trump immediately ordered a “reverse blockade” of the Strait of Hormuz, preventing all ships from entering or leaving Iranian ports.

April 21: Trump announced the extension of the ceasefire at Pakistan’s request but clarified that the U.S. would continue maritime blockade operations against Iran and demanded Iran submit a unified negotiation plan.

April 22: Brent crude at $92.87, WTI at $89.12, prices still about $20–25 above pre-conflict levels.

Data and Structural Analysis: Irreversible Supply Loss

Quantitative Impact of Strait Transit

The Strait of Hormuz accounts for a quarter of global seaborne oil trade. Before the conflict, daily shipments of crude oil, condensates, and refined products through the strait exceeded 20 million barrels. By early April, this had plummeted to about 3.8 million barrels per day.

Alternative routes are far insufficient to fill the gap. Oil exports from Saudi Arabia’s West Coast, UAE’s Fujeirah, and Iraq’s Kirkuk-to-Turkey pipelines increased from about 4 million barrels/day pre-conflict to 7.2 million barrels/day, but total oil exports still lost over 13 million barrels/day. The cumulative supply loss in March alone exceeded 360 million barrels, and is expected to reach 440 million barrels in April.

Quantitative Predictions from Institutions

Significant divergence exists among Goldman Sachs, Morgan Stanley, SocGen, Citi, and EIA/IEA forecasts, reflecting the core contradiction in current markets: differing judgments on “recovery time,” which directly influence the central price level of oil. Optimists bet on rapid supply restoration; pessimists believe it will take at least 8 months. Trump’s latest “ceasefire without navigation” policy clearly leans toward supporting the latter view.

Public Opinion Breakdown: Ceasefire Signals and Market Insensitivity

Optimists: Ceasefire as a Prelude to Thaw

Represented by Goldman Sachs, optimistic institutions believe Persian Gulf oil flows could gradually return to normal before mid-May, with geopolitical risk premiums in oil prices quickly dissipating. White House National Economic Council Chair Harret previously stated that the Strait of Hormuz could reopen within two months. Trump’s announcement of extending the ceasefire is interpreted by some market participants as a positive signal to “prevent escalation.”

Cautious: No Lifting of Blockade, No Meaning in Ceasefire

SocGen’s review of past Middle East energy shocks since the Suez Crisis in 1956 finds that normalizing oil prices after crises typically takes about 8 months. The bank points out that port damage, debris removal, shipping disruptions, and huge insurance costs are “obstacles” to price decline. The explicit maintenance of maritime blockade in this ceasefire statement indicates that physical supply chain recovery has not yet begun.

Citi’s analysis is even more severe. The report states that even in the most optimistic scenario—U.S. and Iran reach peace this week, and Strait transit and oil production normalize by late June—delays in capacity recovery, logistical bottlenecks, and war damage could still cause a potential loss of about 400 million barrels. Considering existing losses, global inventories could decrease by 900 million barrels, reaching the lowest levels in nearly eight years. Rebuilding inventories would take over two years.

Pessimists: Market Has Not Fully Grasped the Severity

Saad Rahim, chief economist at Toc Group, explicitly states: “The market clearly has not yet fully understood the severity of this supply shock.” He emphasizes that even if peace is achieved, normal oil flow recovery will take time, “there is a significant disconnect between market expectations and reality.” Amrita Sen, co-founder of Energy Aspects, further notes that “oil transportation through the Strait of Hormuz may never fully return to pre-war levels.”

The core disagreement among all viewpoints is not whether “ceasefire is useful,” but “how long the blockade will last.” Trump’s recent statement adding “regardless of the outcome” increases uncertainty about negotiations, further shrinking optimistic expectations.

Industry Impact Analysis: Chain Reactions from Supply to Demand

Refining and Petroleum Products: Sharp Drop in Processing

IEA reports that in April, refineries in the Middle East and Asia faced raw material shortages, reducing processing capacity by about 6 million barrels/day to 77.2 million barrels/day. Global crude processing in 2026 is projected to decline by an average of 1 million barrels/day. Meanwhile, the crack spread for middle distillates hit record highs, with Singapore’s middle distillate prices surpassing $290 per barrel at times. This indicates that the tightness in the refined products market exceeds even that of crude oil itself.

Strategic Reserves: Marginal Diminishing Returns

The 32 IEA member countries have coordinated the release of 400 million barrels of strategic reserves, far exceeding the 183 million barrels released after the 2022 Russia-Ukraine conflict. As of April 10, 2026, the U.S. Strategic Petroleum Reserve stood at about 409 million barrels, down from March. However, given the daily shortfall of over 73B barrels, this scale of release can only fill about a month’s gap, and its price-stabilizing effect is diminishing.

Alternative Supplies: Distant Water Cannot Quench Near Fire

From a supply substitution perspective, major oil-producing regions worldwide cannot quickly fill the gap. U.S. shale oil growth faces a 1–2 year lag with efficiency bottlenecks; Brazil and Guyana’s deep-sea projects have 8–10 year investment cycles; Canada’s pipeline export capacity is limited. Although OPEC+ announced a 206k barrels/day increase in April, this is far from enough to cover the multi-million barrel shortfall.

Demand Destruction: High Oil Prices as a Natural Hedge

IEA forecasts that global oil demand will decline by 1.5 million barrels/day in Q2 2026, the steepest drop since the pandemic. March demand was already down 800k barrels/day year-over-year, with April expected to see a further decline of 2.3 million barrels/day. The demand destruction caused by high prices is spreading from Asia-Pacific to the global market, acting as a passive mechanism for market rebalancing.

Conclusion

Trump’s announcement of a ceasefire extension on April 21 injected a glimmer of diplomatic easing into tense U.S.-Iran relations. However, a ceasefire does not equal navigation, nor does it mean unblocking. The continued maritime blockade by the U.S. means that the daily supply shortfall of over 290k barrels is still accumulating in an irreversible manner. The estimate of a billion barrels of supply loss by Toc Group and Citi’s view that “inventory rebuilding will take over two years” both point to a core conclusion: the oil market has passed a “critical point,” and traditional policy tools and diplomatic signals are being undermined by physical realities.

For market participants, recalibrating expectations of “normalization” from “weeks” to “several quarters or even years” may be more important than closely watching the next negotiation statement. The market’s insensitivity to ceasefire news is perhaps the best testament to this reality.