Crude oil is back to within a dollar or two of where it traded before Israel and the United States struck Iran on February 28. Physical shipping through the Strait of Hormuz is not. That gap, not the headline price, is where the actual risk to Canadian energy portfolios now sits, and it runs through a single unresolved question: who gets to charge a toll for using the strait.
Technical talks between US and Iranian delegations concluded a two-day round in Doha on July 2 without a breakthrough, according to reporting from the region on the conflict's 125th day. The session produced real, if narrow, progress: a mechanism for releasing the first tranche of frozen Iranian assets through a goods-purchase structure, and a communications channel to flag violations before they escalate into renewed strikes. What it did not produce was any resolution on the toll dispute, which both sides now treat as the hardest open question in the entire negotiation.
Why a Toll Dispute Is the Mechanism, Not a Footnote
Iran and Oman have asserted joint sovereignty over the strait and floated a voluntary fee system for transiting vessels once the current 60-day memorandum of understanding expires in mid-August. The United States has rejected any Iranian-led tolling mechanism as unacceptable, with Vice President Vance stating the position directly in Doha. The memorandum itself only bars tolls during its 60-day term, meaning the dispute that triggered the closure of the strait in the first place is scheduled to resurface at almost the exact moment markets are pricing in a full return to normal.
For a Canadian energy investor, this is the base case versus tail risk distinction that matters. The base case, and the one WTI's current price reflects, is that technical normalization continues and the toll question gets resolved or deferred without new disruption. The tail risk is that the August expiry of the tolling ban reopens exactly the dispute that produced a 95% reduction in crude tanker traffic through the strait at the conflict's peak, this time with markets having already priced in the all-clear.
Combined daily flow through the Strait of Hormuz has recovered to roughly half of pre-war throughput, even as WTI has priced in a much fuller normalization.
Pre-war throughput reflects the strait's approximate 20 million barrel per day pre-conflict capacity. UAE figures reflect that country's restored export volume specifically, not the full strait total.
The Recovery Is Real, But It Is Not the Same Recovery as the Price Suggests
Saudi Arabia's crude exports have rebounded to roughly 90% of pre-war levels and the UAE has restored output above 3.9 million barrels per day, both genuine signs of normalization. Combined flows through the strait now exceed 10 million barrels a day, roughly half of the estimated pre-war throughput of around 20 million barrels daily. WTI, however, has already round-tripped essentially all the way back to its pre-war level near $70, which means the price has priced in a recovery the physical flow data has not yet delivered. ING's Warren Patterson made this point directly, warning that the market is treating a conditional ceasefire as a permanent deal and may have "overshot to the downside" on the assumption that supply normalizes quickly.
The United Arab Emirates' own state oil company has estimated that full flows through Hormuz will not resume until 2027 even under a best-case scenario. A Canadian energy investor holding positions on the assumption that the Hormuz story is fully resolved is holding a position built on the price, not on the underlying physical recovery the price is supposed to represent.