Oil prices tumbled on April 8 after the U.S. and Iran agreed to a two-week ceasefire, with Brent crude falling about 13% and West Texas Intermediate posting its biggest single-day drop since April 2020, according to World Oil.

Markets reacted to the prospect of Hormuz reopening. Bank of America thinks the reaction missed the point.

“Boats will move, but oil fields stay shut,” Bank of America analysts said in a note. “Oil is still tightening.”

What the Iran ceasefire actually changes for oil and what it does not

The two-week truce allows coordinated tanker passage through the Strait of Hormuz. Iran’s foreign minister described safe passage as possible “via coordination with Iran’s Armed Forces and with due consideration of technical limitations,” CNBC reported. That matters for physical flows of stranded cargoes. It does nothing for production.

Bank of America estimates approximately 11 million barrels per day of production remain shut in across regional fields. Restarting those fields requires specialized crews, pressure testing, equipment pipelines, and safety certification.

None of that can happen in a two-week window. “This ceasefire is explicitly short-lived,” the bank’s analysts noted. “Fully reactivating these fields will take weeks, maybe months, and simply will not happen in a temporary truce.”

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More oil and gas: The assessment aligns with what industry analysts have said independently. Joe Brusuelas, chief economist at RSM US, said restarting production “is a minor engineering feat and of itself” and predicted a three-to-six-month timeline to fully recover pre-war output levels, Axios reported.

Neil Roberts of the Lloyd’s Market Association was equally direct. “It is highly unlikely that trade into the Gulf will simply resume,” according to World Oil.

How the oil market fundamentals shifted during the Iran war

Bank of America’s note frames the current situation against what looked like a very different oil market before the war began.

A 400-million-barrel inventory surplus had built up through the second half of 2025, with analysts projecting that glut to double in the first half of 2026 and push oil prices toward the low $50s. The war erased that overhang entirely within five weeks.

“Fundamentals today are simply different,” the analysts said. “The 400 million barrel build that occurred in 2H25, which threatened to double in 1H26 and push oil into the low $50s, has now been wiped out five weeks into the war. Balances are now much tighter, mid-cycle oil is now higher, geopolitical risk has been validated, and global SPR refill will likely firm future demand.”

The International Energy Agency coordinated a release of 400 million barrels from strategic reserves during the war to offset supply disruptions. Replenishing those reserves will add a structural layer of demand to the market as the situation stabilizes.

Oil prices have climbed.

What Bank of America expects for oil stocks

Koutsokostas/Getty Images Bank of America’s conclusion is calibrated rather than categorical. The bank expects oil stocks to reverse higher from depressed levels, but draws a clear ceiling on how far that recovery goes. “Oil stocks will still reverse, just not all the way,” the analysts said, noting that Hormuz passage provides partial relief that limits a full return to pre-war pricing levels.

The risk to that view is a ceasefire breakdown, which several analysts flagged as a real possibility. Jason Schenker, president of Prestige Economics, warned that “almost anything going wrong in these talks could very quickly put us back above $100,” World Oil said.

The agreement was already showing signs of strain within hours of the announcement, with tanker traffic remaining halted as Israeli operations in Lebanon continued, according to CNBC.

Key points from Bank of America’s analysis:

  • The ceasefire reopens Hormuz tanker traffic but leaves approximately 11 million bpd of production shut in.
  • Field reactivation requires weeks to months, far beyond the two-week truce window.
  • The 400 million barrel pre-war inventory surplus has been entirely wiped out.
  • Mid-cycle oil price forecasts have shifted structurally higher.
  • Global SPR refills will create a durable demand floor going forward.
  • Oil stocks expected to reverse higher, but not back to pre-war peaks.

The broader picture for oil

Oil prices remain significantly above pre-war levels, despite the Wednesday, April 8, decline. WTI closed at $94.41 on that day, still well above the roughly $70 per barrel that prevailed before the conflict began, CNBC reported. Forward oil futures contracts reflect the same dynamic, with traders not pricing a return to pre-war levels this year, according to Axios.

The Bank of America note captures why. A ceasefire that stops the fighting is not the same as a ceasefire that restores supply. The tankers can move. The barrels, for now, cannot.

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