Trump’s time is running out to avoid a nightmare Strait of Hormuz scenario

Crude oil prices plunged below $70 per barrel at the beginning of the week, and energy markets largely considered the Iran war over and done with as modest traffic flowed again through the infamous Strait of Hormuz.

But nearly 1 billion barrels of worldwide petroleum reserves are now depleted and not being replenished. At the same time, mothballed refineries have yet to come back online, China still hasn’t resumed importing large oil volumes, and now President Donald Trump has declared the interim peace deal “over” amid new drone and rocket exchanges.

The reality is there’s no clear, long-term peace deal in sight, even if a full resumption of conflict is avoided. That means the Strait of Hormuz is unlikely to return to its normal volumes for many months, and certainly not in time for the anticipated spike in demand when China and refiners start buying more oil again, energy analysts told Fortune. Prices are going to surge again—likely close to $90 per barrel—despite the world learning to adapt and avoid doomsday scenarios of $200 oil, they said.

And this could represent a nightmare scenario for a Trump administration eager to move on from Iran and lower fuel prices in time for the November midterm elections.

“There’s a bill that’s coming due,” said Marshall Adkins, head of energy for Raymond James, who admitted oil prices had fallen more than he anticipated. “The market thinks, ‘Oh yeah, things are going back to normal.’ But, watching Iran for as long I have, I don’t think that’s really going to happen. That hasn’t been the modus operandi for Iran for the last 45 years.”

If he didn’t before, Trump now knows. With the U.S. trying to increase traffic closer to the Oman side of the strait, Iran opened fire on some vessels this past week. The U.S. countered. At the July 8 NATO summit in Turkey, Trump said he thinks the interim deal with Iran is “over,” and he went on to call the Iranian leadership—in alphabetical order—“cancer,” “cheats,” “cuckoo,” “evil,” “liars,” “scum,” “sick,” “vicious,” and “violent” people. In June, he said they were “very rational people” who were “nice to deal with.” What changed? “I got to known them.” It also probably didn’t help that Israel warned the U.S. of a potential Iranian threat on Trump’s life.

Trump then also said he doesn’t think a full war would resume and that “anything that happens will be over........

© Fortune