Continued closure of the Strait of Hormuz poses global recession risk
May 22, 2026
Energy Market are closed on Monday May 25 for Memorial Day. No contracting on Monday.
Energy price sold off again in yesterday’s trading on the news that negotiations with Iran were in the final stages. Also helping the selling was the UAE completing almost 50% of a pipeline that will bypass the Strait of Hormuz that is expected to be completed by 2027. The news of increased ship traffic in the strait with more tankers to Asia is also good news and puts sell pressure on prices.
From Bloomberg. Energy prices have spiked all over the world, and fear is rising about what comes next for the global economy. If the strait doesn’t open by August, markets may find out the hard way. So, says Rapidan Energy Group, which warned the continued closure of the waterway through summer raises the risk of a recession that may rival the global financial crisis.
Iran’s Islamic Supreme Leader’s comments that Iran uranium stockpile most not leave the country and Iran plan to work with Oman for a permanent toll system in the Strait of Hormuz have added confusion and uncertainty to the current peace negotiations.
Comments from Cost Management Solutions resonate with me today. There is certainly headline fatigue with prices shifting on the latest comments from the White House and Iran. The perceived situation in regard to negotiations can change from statement to statemen sometimes within the same interview. At some point you just start tuning it out and assume nothing has changed.
Physical prices for gasoline in the US appear to be strengthening and inventories are now 10 million barrels below the 5-year seasonal average – the largest deficit this year. Gasoline demand has remained steady but there have been some policy adjustments to ease RVP mandates and allow E 15 blending. Policies will be aimed at reducing demand or increasing supply of gasoline as it is the most visible indicator of inflation ahead of the midterms.