A Hormuz Opening
Not a switch that gets flipped.
What would the re-opening of the Strait of Hormuz look like? That question had never crossed my mind prior to February 28, 2026. Not once.
Now it’s a vitally important question. A lot depends on the answer.
I’m not qualified to provide an answer. Happily enough, Bridgewater Associates, the world’s largest hedge fund, employs people who are qualified to answer the question.
And four of those people did just that, in a recent newsletter — Bridgewater Observations — that the firm produces for its clients.
From time to time, Bridgewater allows News Items to republish excerpts from its research. What follows is re-published with the firm’s expressed permission.
What a Hormuz Opening Would Look Like for Energy Markets
By Ian Singer, Kobi Platt, John Michael Cassetta, and Wyatt Currie.
Recent Bridgewater Observations on the Iran conflict have focused on how the disruption of flows through the Strait of Hormuz has been absorbed, where the strains are building, and what an extended outage would mean for prices and growth. In this Observations, we turn to the opposite possible forward path and walk through what a reopening of the strait would actually look like. We are setting aside the question of whether and when the geopolitics resolve and instead focusing on the process, timeline, and first-order implications that would follow if there were to be a substantial and durable reopening.
A reopening of the strait would likely be a throughput-constrained restart, not a switch that gets flipped. However, because the market entered this crisis with a large surplus, the discharge of floating inventory currently trapped in the Persian Gulf—and even a partial restoration of flows—could be enough to push balances back toward a neutral-to-surplus level from the current historic deficit and pull prices back down to the ~$60-70 per barrel range that we saw before the conflict, well ahead of a full physical supply/demand normalization. If the reopening came relatively soon, the global economy would likely recover rapidly and avoid long-term damage.
Any restart of the strait would likely be phased over roughly three months:
