The Opening of the Strait of Hormuz Will Not Fix Gas Prices Tonight

Wednesday evening, President Donald Trump officially signed a Memorandum of Understanding with Iranan agreement that establishes a 60-day non-combat and long-term stay nuclear negotiations between two species. And, conversely, it also opens up Hormuz Riverthe narrow channel between Iran and Oman that is often used as one of the international routes important energy transmission systemsand 20 million barrels of oil flow every day.

By Thursday morning, 10 ships that had been stranded for the entire 110 days of the US-Iran war had begun to leave the region, according to Windward, a naval intelligence firm. The Strait of Hormuz appears to be open for business.

But experts say U.S. consumers shouldn’t wait for oil prices to drop—which they will jumped more than 35 percent throughout the country from the end of February – to recover as soon as possible. Sailors are still afraid of the difficult peace in the Strait, which still has many underwater mines. It does not help that Trump continues to threaten violence in the region. “We’re going to blow them up” if Iran doesn’t stop its nuclear program, President he told reporters Wednesday. “It’s amazing what bombs can do.” Meanwhile, the oil refinery is just getting started.

“For consumers, the main thing to note is that there is no sign that prices are going back to February right now,” says Jason Miller, a professor of consumer goods management at Michigan State University’s Eli Broad College of Business. “Global oil demand, the big picture, is very distorted.” Right now, he says, people who buy gas, food, fertilizer, and anything else that depends on fossil fuels should not count on a quick recovery.

Although gasoline prices have fallen since the recall was announced, consumers would do well to budget for higher wartime prices to last longer.

“This is a big deal,” says Miller. “None of this would have happened if you hadn’t fought.”

Shipping Issues

Jakob Larsen, director of safety and security at BIMCO, the world’s largest shipping company, said in a written statement on Thursday that the industry still sees the Strait as a threat to the safety of ships. Its central part is “mined and impassable,” he wrote, which means the safest rail routes right now are likely to be narrower closer to Iran or Oman. The memorandum did not include important points that will determine what the next weeks and months will look like, shipping-wise: which routes are the most secure, how and when ships can move in certain directions, whether the military will be involved in similar operations, or whether Iran can pay.

Larsen wrote: “Reliable assurances from both sides of the dispute must be provided before traffic resumes until a resolution is reached.”

Part of the problem is that no one knows exactly how long it will take to make the Strait safe enough for shippers and their insurers. The channels “need to be cleared,” says Michelle Wiese Bockmann, a maritime forensics analyst at Windward, and “nobody knows how long it will take—six weeks or six months.” Earlier this week, Trump said efforts to remove mines are it’s already running. Effort may include several countries, submarines, underwater drones that use sonar emitters to detect underwater problems, naval vessels, and even US Navy trained mine-detecting dolphins (even CNN report last month that dolphins are suspected to be active in the area).