Oil prices may remain at $100 per barrel months after the present war ends. (NYT)US President Donald Trump told reporters at the White House that the US “will be leaving [Iran] very soon” and US military action could end as soon as “two or three weeks”. If that were to prove true, and that’s a big if, what is very clear is that the price of crude is likely to remain elevated, possibly around $100 per barrel, months after this war draws to a close.There are multiple reasons for this: Supply disruptions will take many months to unwind, even if the Strait of Hormuz through which roughly a fifth of the world’s oil trade traverses were to open up fully. While tankers stranded at sea on either side of the Strait currently could head for their destinations as soon as Iran were to formally open up the passage, new shipments on that route would likely take longer to get going. That is because shipping contracts, marine insurance and other supporting factors would have to be redrawn now, adjusting for the new realities and the lingering threats that could progressively ebb over time.Then there’s the issue of damages suffered to oil infrastructure in the entire region, which could take months to assess, repair and get back to normal. That includes gas-linked infrastructure in Qatar, and oil refineries and terminals across the UAE, Saudi Arabia and Bahrain.Then there are even more compelling demand side factors. Many countries such as Japan have started to run down strategic petroleum reserves. Once the supply situation comes close to normalisation, most of these countries would try to get hold of the supplies, primarily to fill up their reserves and restock. Others such as India could start work on expanding their reserves, which have been stagnant for some time. As a result of all this, there could be a situation where crude supply takes much longer to come back on stream. Demand is most certainly going to be above normal, with the result that crude oil prices could remain elevated for the next six-nine months beyond when the war draws to an end, a shipping expert told The Indian Express.Also Read | Amid West Asia war, why inflation is forecast to breach target in June quarterAlso, there are restrictions that multiple countries have now placed on export of refined petroleum products, as well as on the supplies of jet fuel to aircraft refuelling at their airports. That could take longer to draw down, which could mean air travel could continue to remain elevated in the months after the war draws to a close.As part of its conditions to end the war, Iran has made a demand for reparations. While that is unlikely to see the light of day, there is an alternative that Tehran could push. Especially as the US has, in the past few days, made assertions that the responsibility of opening up the Strait of Hormuz lies with the countries whose oil passes through the waterway.The tollAt this point in time, Iran has blocked that route while allowing ships to squeeze through a tiny waterway closer to that country’s coastline in lieu of, according to a shipping intelligence firm, a toll reported to have been around $2 million to go through and not get attacked. With the US looking the other way, there is a chance that little detour stays active for some time.Story continues below this adAlso in Explained | As the US talks of seizing Kharg, 3 problems and an ominous precedentGiven that in a typical year, the number of tankers that transit the Strait of Hormuz is around 50,000, the $2 million dollar toll for each ship means a neat $100 billion of new revenue for Iran. That’s over a fourth of Iran’s GDP last year. Given that a Very Large Crude Carriers can carry the equivalent of about 2 million barrels of oil, the $2 million toll works out to about $1 a barrel for a commodity that is currently retailing for around $100 a barrel.So, about 1% of the value of the oil stuck in the Strait could be extracted through this charge, and for those passing through it. This is even though the concept of the toll is illegal in the first place under international law, because the United Nation considers the Strait of Hormuz an international strait that is open to all. But Iran is likely to see this as a short-term revenue measure, even if sanctions waiver is something on the table. The longer the war continues, the more difficult it would be to wean Iran away from this revenue stream.Most analysts predict that oil would still be somewhere between $80 and $100, given the possible stickiness in the supply and how long it takes food this to unwind. The longer the war continues, the longer is this likely trajectory from $100 to $80 or less.Anil Sasi is the National Business Editor at The Indian Express, where he steers the newspaper’s coverage of the Indian economy, corporate affairs, and financial policy. As a senior editor, he plays a pivotal role in shaping the narrative around India's business landscape. Professional Experience Sasi brings extensive experience from some of India’s most respected financial dailies. Prior to his leadership role at The Indian Express, he worked with: The Hindu Business Line Business Standard His career trajectory across these premier publications demonstrates a consistent track record of rigorous financial reporting and editorial oversight. Expertise & Focus With a deep understanding of market dynamics and policy interventions, Sasi writes authoritatively on: Macroeconomics: Analysis of fiscal policy, budgets, and economic trends. Corporate Affairs: In-depth coverage of India's major industries and corporate governance. Business Policy: The intersection of government regulation and private enterprise. Education Anil Sasi is an alumnus of the prestigious Delhi University, providing a strong academic foundation to his journalistic work. Find all stories by Anil Sasi here ... Read More © The Indian Express Pvt LtdTags:Explained EconomicsExpress Explained