StoneX’s Johanna Botta interviews Alex Hodes about oil after the US-Iran agreement, and Hodes argues futures have repriced faster than the physical market but that real flows are already normalizing. He says crude is softening as barrels return through Hormuz, yet the bigger risk has shifted to tight refined products—especially diesel—while inventory rebuilds and Russia-related export disruptions keep the market unsettled.
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This is a focused oil-market interview centered on the aftermath of the US-Iran agreement and what it means for crude, shipping through the Strait of Hormuz, and downstream product tightness. Johanna Botta frames the setup as a gap between futures-market optimism and the slower-moving physical market, and Alex Hodes says the market has already repriced meaningfully over the past several weeks. His core thesis is not that oil is fully “back to normal,” but that physical flows are returning faster than many expected, while the market is still working through the mechanical consequences of de-risking, inventory drawdowns, and route normalization. Hodes says the repricing began after the signing of the MOU between Iran and the US, and that some physical barrels are already returning. …
Near term, crude looks vulnerable to more softness as barrels continue to return and sentiment unwinds, but the setup is fragile because any shipping or peace-talk setback can quickly reverse it. Diesel and other refined products are the more immediate upside risk if inventories stay tight.
Over the next few weeks to months, the base case is a gradual reset in crude followed by a slower, more uneven rebuild in inventories. The view holds if Hormuz traffic normalizes and buyers remain disciplined; it changes if China steps back in forcefully or if the deal stalls.
Structurally, this episode suggests oil is moving from a single crude-supply shock toward a regime where downstream capacity, product inventories, and regional export policy drive the more persistent pricing power. Even if headline geopolitics cools, refined-product tightness can remain the durable market constraint.
Physical oil flows through the Strait of Hormuz are returning at approximately 7 million barrels per day, about 40% of pre-war levels.
Alex cites reports showing specific physical flow numbers returning through the Strait of Hormuz.
The US-Iran MOU has triggered significant repricing in oil markets over the past several weeks.
The repricing is specifically in response to the signing of the MOU between Iran and the US.
Both gasoline and heating oil refining crack spreads remain at historical highs, indicating tight refined product markets.
Alex cites crack spread data showing elevated spreads across both products, signaling supply constraints.
Is the market pricing in normalization faster than the physical market can actually realistically deliver it?
Alex confirms there has been repricing due to the US-Iran MOU, with physical flows returning quicker than expected — about 7 million barrels per day through the Strait (~40% of pre-war flows). Asian buyers remain on sidelines. Physical differentials are softening and backwardation is flattening, so the physical market is also showing signs of softening, not just futures.
If hostilities ease and Hormuz remains open, what are the practical hurdles that still stand in the way of a full recovery in oil flows?
Ship owners will be hesitant to pass through the Strait until insurance rates come down. Initial barrels going through are Iranian, but Saudi and Kuwaiti barrels are also moving. Any hiccup in peace talks — especially military action in Lebanon or disputes over reconstruction funds for Iran — could derail things. The biggest hesitation will be ships transiting east-to-west into the Strait vs. tankers stranded in the Persian Gulf exiting. Excess storage needs to be cleared first.
What happens when countries, refiners and traders start trying to rebuild those inventories?
China is the biggest factor — they have been a shock absorber withdrawing inventories, with imports weak in May and June forecast at 9 million barrels/day. The question is when they step back in. Lower prices will eventually attract buyers, but Asian buyers already had June/July demand set. US inventories remain tight. Alex expects more downward price action first, then when prices tick higher, buyers will step in to refill, providing a floor to the market.
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