A market tipping point could arrive by late September or early fourth quarter if Hormuz flows remain restricted, potentially sending crude prices toward $120–140 per barrel as inventories run down, analysts have warned.

Oil markets remain torn between hopes for a U.S.-Iran deal and worsening physical supply constraints, with Hormuz traffic at two-month lows and inventories steadily declining.

Refined products are facing the biggest squeeze, as diesel, gasoil and jet fuel supplies tighten amid Middle Eastern and Russian refinery disruptions, pushing refining margins to record highs.

For months now, traders and market analysts have had to weigh two opposing scenarios for oil prices—the ongoing war and severely disrupted oil flows at the Strait of Hormuz and hopes that a U.S.-Iran deal would free up millions of barrels of oil and refined products trapped in the Persian Gulf.

For five and a half months of negotiations, threats, Iranian attacks on tankers, U.S. blockades on Iran’s oil exports, and numerous pledges of “strong responses” from both sides, oil prices have spiked and crashed so many times that these can only be compared to the number of threats from U.S. President Donald Trump to “obliterate” Iran.

This week’s story is the apparent stalemate over the control of the Strait of Hormuz, which remains mostly closed, with traffic at two-month lows.

The crude oil futures market moves on sentiment and (a lack of) hope about an imminent reopening of the Strait. This has been the case since the war began.