The high oil price storm is far from over! The "aftermath" of the blockade in Hormuz is hard to dispel, and energy stocks are entering a "overweight window".

Oil traders, the largest in the world, have recently issued warnings that the impact of the ongoing Middle East geopolitical war may continue for several months, even if any peace or ceasefire agreements are reached to restore oil and gas resource shipping through the Strait of Hormuz. Some commodity traders even pessimistically suggest that the flow of ships through this vital energy transport route may never return to normal, and international oil prices may remain in historically high price areas for an extended period. Due to the latest round of US-Iran negotiations being temporarily suspended by the highest leadership of both sides, the international benchmark crude oil futures price - Brent crude oil futures price is currently trading slightly below $100 per barrel, significantly lower than the near $120 per barrel highs reached in the weeks following the 2022 Russia-Ukraine conflict eruption. This highlights that the market is still closely following any news dynamics related to the upcoming talks between the US and Iran in Pakistan. During the Asian session on Wednesday, Brent crude oil futures prices hovered around $98 per barrel, retracing some of the gains from the previous trading day. Shortly after the closing of the US stock market on Tuesday (Wednesday morning Beijing time), US President Trump announced an extension of the US-Iran ceasefire agreement and pointed out a "serious split" in the leadership of Tehran. He added that the temporary ceasefire agreement between the US and Iran will remain in effect until Iranian leaders present a "unified solution" to end the conflict. At the same time, media reports suggest that after Tehran informed Washington through Pakistan that it would not participate in the talks, US Vice President Pence canceled his scheduled trip to Islamabad for negotiations. Iran also stated that it would not reopen the Strait of Hormuz as long as the US Navy continues to intercept ships. Since the outbreak of the Iran war at the end of February, the Brent crude oil futures price has continued to hover and stabilize around $100 per barrel, no longer experiencing the wild surge seen at the beginning of the geopolitical war - indicating that high oil prices may pose a sustained and significant threat. Investors, global central bank policymakers, and corporate leaders must face this potential reality of high oil prices being a long-term issue. It is understood that the ongoing blockade of the Strait of Hormuz, preventing ships from entering the Persian Gulf, has left customers unable to fulfill contracts and forced significant production cutbacks at the time of the strait's closure, leading to Kuwait, a major oil exporter, announcing significant "force majeure" for its crude and refined oil transport systems. Kuwait's oil infrastructure has been repeatedly targeted, and its production has now fallen to extremely low levels not seen since the early 1990s after the Iraqi invasion. Insiders say that once hostilities ease, a full production recovery will still take time, indicating that the region's vast oil exports will continue to be severely impacted. The overall oil production in the Middle East has been significantly reduced due to the Iran war, and this time the production cuts and the surge in oil prices are not just due to the "blocked Strait of Hormuz shipping"; rather, it is a triple combination of "production cuts + blocked exports + damaged infrastructure due to missile strikes"; these factors are why investment consulting firm Yardeni Research Founder Ed Yardeni and other Wall Street veteran strategists have recently emphasized that in an environment where the global economy is facing high financing costs and geopolitical shocks, energy stocks are moving from cyclical trading to strategic overweights in portfolios. Ceasefire does not mean restoration: the oil market's "billion-barrel black hole" has just begun to emerge At the Financial Times Global Commodities Summit in Lausanne, Switzerland, senior executives of some of the world's largest oil and other commodity trading companies have warned that even if a peace agreement is quickly reached, the restructuring of the oil market supply chain will take months. They say that the energy trading market has not fully reflected the negative impact of the largest supply disruption in history, and warn that if this conflict continues, oil prices will need to further steadily increase until pushing the global economy to the brink of a recession. A recent study released by the International Energy Agency (IEA) shows that the US and Israel's military actions against Iran at the end of February resulted in the largest supply disruption in the history of the global oil market. Russell Hardy, the CEO of Vitol Group, stated at the summit that the oil trading market is facing at least around 1 billion barrels of certain supply losses, partly because even if the strait reopens, the restoration of oil and gas trade flow itself will take time. "You have to recalibrate the entire oil supply chain," said Frederic Lasserre, Head of Research and Analysis at Gunvor Group. "So, starting from the very beginning of crude supply, to restore supply to pre-war levels, it may take at least three to four months." The continued closure of the Strait of Hormuz has released a chaotic but potentially highly profitable phase. Large companies that have long dominated global natural resource trade are rushing to take advantage of the significant market mismatch, a situation where industry leaders are typically adept at benefiting. Several major energy trading companies also have many goods trapped in the Persian Gulf, with Marco Dunand, the head of Mercuria Energy Group, stating that despite efforts to get ships out of the region, the Iran war is still ongoing. However, due to the "double block" by the US and Iran in the Strait of Hormuz - both choosing to block the strait to exert maximum pressure on each other, the observable shipping flow through the strait this week has almost come to a standstill, with only a few small vessels still passing through. Energy industry executives and Wall Street analysts have warned that if the US and Iran cannot reach a solution soon, the oil market will face increasing supply pressures. Lasserre said that if the war continues for another month, the oil market will reach "tank bottoms," a term referring to the professional term for when the global oil market depletes its inventories. The news of Kuwait declaring force majeure due to the latest geopolitical developments is considered more favorable in the medium term for international oil prices, which have been on a downward trajectory recently, making short-term oil price volatility difficult to hedge against. Apart from Kuwait, Iraq, Qatar, the UAE, and Saudi Arabia are also being affected to varying degrees by the closure of the Strait of Hormuz, stockpiling, damaged ports and energy facilities. More importantly, the latest research reports from commodity analysts generally emphasize that even if the Strait of Hormuz reopens, the restoration of oil and gas flows is not just about "open the strait," but it is about "restoring the entire normal export chain to pre-war conditions," as there are still many issues such as stranded oil tankers, full storage tanks, energy facility repairs, and the return of workers. The analysis team from the international financial giant Macquarie stated in a report that if the Middle East geopolitical conflict continues until the end of the second quarter, oil prices could rise to $200 per barrel. From capacity mismatch to a new global replenishment frenzy: the oil market order may never return to what it was before The reordering of the global oil tanker fleet may also slow down the process of restoring normal energy system transportation flow. According to data released last week, dozens of very large oil tankers are now heading towards the United States, preparing to load cargo there, with US crude oil exports also reaching record highs. However, this also means that once the strait reopens and production gradually recovers, there may be a relative shortage of large shipping vessels available in the market for transporting related goods. Energy traders and ship owners also express concerns that with large transport vessels potentially more willing to avoid the Persian Gulf, their willingness to send ships back to this waterway may be lower. According to data from Signal Ocean, about 76 very large oil tankers capable of carrying around 2 million barrels of crude oil are currently sailing empty towards Atlantic China Welding Consumables, Inc., where they are expected to load US-produced crude oil. At the same time, the benchmark day earnings for very large oil tankers on the route from the Middle East to China have reached around $500,000, about nine times higher than last year. Even as the shipping system in the Gulf gradually recovers, the oil market may continue to experience significant price fluctuations for a considerable amount of time, as countries and energy companies will try to rebuild the oil inventories that were essentially depleted during the war. "You have already depleted all the buffer stocks, so there are no more stocks available, and to rebuild government oil stocks to an appropriate level, we still need quite a long time," said Pedersen from Vitol. Some government organizations may seek to establish higher strategic oil reserves than before the war. Amrita Sen, Co-founder and Research Director of Energy Aspects, stated that her energy research company's current basic assumption is that if the blockade is gradually lifted, oil transportation flow through the Strait of Hormuz will recover to 50% of normal levels next month and to 75% by June. However, she warned that full recovery may still be a long way off. "We may never return to normal," she said. What will truly determine the central trend of oil prices may not be whether the conflict temporarily subsides, but the "post-war revaluation" of the energy chain, including the reopening of the Strait of Hormuz, maritime insurance, oil tanker capacity, refinery repairs, and inventory rebuilding. As of April 21, only 3 ships passed through the Strait of Hormuz in the past 24 hours, far below the normal daily average of about 140 ships before the war, and while the US government has extended the ceasefire, the blockade of Iranian ports is still ongoing. The energy and oil trading markets are not facing a linear logic of "ceasefire agreement = supply restoration." From a macro and commodity perspective, Wall Street veteran Ed Yardeni's decision to be bullish on energy stocks at this time, and his judgment that "even if the war ends, oil prices will not return to pre-conflict levels," essentially defines this round of oil price shock as a structural supply damage rather than a one-time geopolitical risk premium. Even if the strait reopens, it will take several months for the flow of oil, tanker deployment, refinery ramp-up, and inventory replenishment. Birol from the International Energy Agency even stated that a significant portion of disrupted oil and gas production due to the war may take up to two years to recover to pre-war levels. In other words, the ceasefire can only compress the front-end panic premium, but it cannot quickly erase the rear-end supply gap and inventory vacuum. Once the central oil price is permanently raised, the path to global inflation control will stickier; the interest rate cut space for the Federal Reserve and other central banks will be limited, and the valuation of risk assets will continue to be constrained. In comparison, the energy sector can both benefit from the improvements brought by high oil prices and hedge against the risks of war resumption, shipping disruptions, and continued inventory reductions. Therefore, Yardeni's "taking advantage of the optimism brought by the ceasefire to increase holdings in energy" is essentially a bet on a longer-lasting and more difficult-to-reverse supply restructuring cycle, rather than a bet on short-term news headlines.