- The Royal Bank of Canada (RBC:CA) strongly questions the widespread bet on the reopening of the Strait of Hormuz in June, warning that the persistence of geopolitical blockades is being significantly underestimated.
- If the daily supply disruption of approximately 12.5 million barrels continues into June, the global crude oil shortfall will approach 1.5 billion barrels. With the peak summer demand approaching, commercial inventories will face extreme depletion.
- Institutions predict that Brent crude oil prices are likely to surpass the peak during the Russia-Ukraine conflict and approach the historical high of 2008. Long-term government bond yields face the risk of an upward breakthrough, and global equity market valuations may come under pressure.
Goldman's Baseline Scenario Faces Reevaluation Pressure
Disagreements in the commodity research field over the timeline for the recovery of the shipping route are intensifying. Goldman Sachs (GS:US) previously released a baseline forecast indicating that the Strait of Hormuz is expected to begin reopening soon and be completed by the end of June, with Brent crude oil prices falling back to $90 per barrel by the end of the year. However, Helima Croft, head of commodities at the Royal Bank of Canada, publicly refuted this optimistic expectation, pointing out that the widespread narrative of a June reopening is wishful thinking. Croft noted that the current market mistakenly assumes that economic pressure will automatically force stakeholders to activate policy levers, overlooking the depth of supply-side rigid disruptions.
Military and Diplomatic Paths Constrained
The market currently hopes for risk clearance paths mainly focused on unilateral U.S. military intervention or diplomatic negotiations. However, from a macro perspective, the U.S. White House, facing domestic elections and the framework of America First political commitments, has very low willingness to deploy over 100,000 ground troops in the Middle East and engage in prolonged conflicts. Any limited military deterrence is unlikely to achieve the strategic goal of forcibly clearing the chokepoint. On the diplomatic front, Iran views control of the strait as a core strategic asset as important as its uranium enrichment stockpile. Without fundamental easing of Western sanctions, the probability of reaching a concession agreement in the short term remains low.
Prolonged Supply Disruption and Flow Discounts
Even if some form of phased reopening of the strait is achieved later, actual navigation efficiency will be significantly reduced. Historical experience shows that after a ceasefire agreement was reached in the Red Sea region a year ago, due to geopolitical risk premiums and compliance concerns of Western companies, current shipping volumes remain 56% below pre-conflict levels. If Iran maintains substantial control over the Strait of Hormuz, shippers will face high transit costs and secondary attack risks. This prolonged logistical blockage means that the global energy pricing logic has undergone a fundamental reshaping. Under the dual pressure of soaring oil prices and interest rates, the stock market's sensitivity to bond asset signals has risen to a high level, and macro systemic risks are accelerating.
