Strait of Hormuz ceasefire extended, two more ships seized: What Gulf Coast refiners need to know now

Editor's note: BIC Magazine published a breaking analysis Friday, April 17, on what the Strait of Hormuz reopening meant for Gulf Coast refinery margins and oil prices. This piece covers everything that has happened since and where things stand as of Wednesday morning, April 22. We will continue to update our coverage as this story develops.

On Friday morning, Iran declared the Strait of Hormuz completely open. Oil dropped 12 percent. By Saturday it was closed again. Sunday the U.S. Navy seized an Iranian vessel. Monday talks appeared cancelled. Tuesday Trump said he would not extend the ceasefire, then extended it anyway. And this morning, Iran seized two more ships in the Strait.

The situation is still actively moving. As of Wednesday morning, the IRGC has captured the MSC Francesca and the Epaminondas, saying both were attempting to secretly exit the Strait of Hormuz. Brent crude is trading just below $99 per barrel. The second round of Islamabad peace talks never happened. The Strait of Hormuz is still effectively closed to commercial shipping.

For Gulf Coast refinery and petrochemical operators, here is the direct answer: the margin environment that has driven above-95 percent utilization rates and record diesel crack spreads since late February is still intact. The physical supply disruption has not ended. And the path to resolution is less clear today than it was last Friday.

Here is everything that has happened since our last update and what it means for Gulf Coast operations right now.

What happened in the five days since Friday

Friday's reopening announcement did not hold. Iranian Foreign Minister Abbas Araghchi declared the Strait completely open for commercial vessels in line with the Israel-Lebanon ceasefire that went into effect Friday evening. Oil plunged more than 11 percent. WTI fell to nearly $83 per barrel. Jet fuel futures dropped 13 percent.

By Saturday morning, Iran had reimposed control of the Strait, citing the continued U.S. naval blockade of Iranian ports as a breach of the ceasefire agreement. Iranian gunboats fired on tankers attempting to pass. The U.K. Maritime Trade Operations organization confirmed a tanker near the Strait was attacked by two IRGC gunboats. Trump called it a total violation of the ceasefire agreement.

Sunday brought further escalation. The USS Spruance intercepted the Iranian-flagged cargo vessel Touska in the Gulf of Oman after it attempted to evade the U.S. naval blockade. The Navy fired on the ship and seized it, according to U.S. Central Command. Brent surged back above $94.

On Monday and Tuesday, the second round of Islamabad talks that Pakistan had been trying to host fell apart. Iran did not send a delegation, citing the ongoing blockade and what it called Washington's excessive demands and unrealistic expectations. Iran's parliamentary speaker Mohammad Bagher Ghalibaf said Tuesday that Tehran has new cards on the battlefield and will not negotiate under the shadow of threats.

Trump said Tuesday morning he had no intention of extending the ceasefire. Then late Tuesday night he reversed course. Citing a seriously fractured Iranian government and at the request of Pakistan's Prime Minister Shehbaz Sharif and Field Marshal Asim Munir, Trump extended the ceasefire indefinitely, until Iran submits a unified proposal to end the war. The U.S. naval blockade of Iranian ports remains in full force. Iran's U.N. envoy Amir Saeid Iravani said after Trump's announcement that as soon as Washington ends the naval blockade, the next round of negotiations will be held in Islamabad.

This morning, the IRGC confirmed it seized the MSC Francesca and the Epaminondas in the Strait of Hormuz, saying both vessels were attempting to secretly exit the waterway. Both were transferred to Iranian territorial waters for examination of cargo and documents. The U.S. also imposed new sanctions today linked to Iran's weapons programs, and the European Union is moving to expand its own measures.

The EU Energy Commissioner Dan Jorgensen said Tuesday that even in the best-case scenario, if the war ended today and the Strait fully reopened, it would take more than a couple of years to get back to pre-war production levels.

What Strait of Hormuz tanker traffic actually looks like right now

The numbers have not improved. Before the conflict, 138 vessels per day transited the Strait of Hormuz on average. Only 12 vessels crossed in the 24 hours before Trump extended the ceasefire, according to MarineTraffic data. The International Maritime Organization has reported that roughly 20,000 mariners and 2,000 ships remain stranded in the Persian Gulf. This morning's seizure of two additional vessels will not make shipping companies more willing to transit.

Mines remain in the water. The U.S. Navy has been conducting mine clearance operations but the work is unfinished. Shipping companies including Maersk, CMA CGM and Hapag-Lloyd have not announced a resumption of Hormuz transits. The brief window Friday, when Iran declared the Strait fully open, produced 19 transits on Saturday before Iran reimposed control. That was 14 percent of normal daily volume on the single best day of the ceasefire period.

Rystad Energy chief oil analyst Paola Rodriguez-Masiu reported this week that Gulf states are expected to produce 14.3 million barrels per day in April, down 3 million bpd from March and roughly 13 million bpd below pre-war levels. That supply gap does not close with a ceasefire extension. It closes when physical infrastructure restarts, tankers move and supply chains normalize.

An IRGC Aerospace Force commander this week threatened oil production sites of Gulf neighbors that help Iran's enemies. Iran held public rallies displaying Khorramshahr ballistic missiles as the original ceasefire deadline passed Tuesday night.

Three oil price scenarios and what each means for Gulf Coast refinery operations

Citi published a note this week laying out three scenarios for where oil prices go from here. The analysis is directly relevant to Gulf Coast operators making run rate and feedstock decisions right now.

In the best case, a comprehensive deal is reached and Strait flows gradually resume, reaching pre-disruption levels by end of June. Citi puts Brent averaging $95 in Q2, falling to $80 in Q3 and $75 in Q4. For Gulf Coast refiners, margins compress from peak levels but remain well above 2025 averages through at least Q3.

In the middle scenario, the ceasefire extension holds, talks continue slowly and flows partially recover over the summer. Brent stays elevated. Gulf Coast crack spreads remain strong.

In the worst case, the extension fails, hostilities resume and the Strait stays closed. Citi puts Brent at $130 by end of June. Citi global head of commodities research Max Layton noted that each day that passes the market burns through roughly 13 million barrels of crude and oil products. Global crude and product inventories are on track to reach their lowest levels in eight years by end of June even in the best-case scenario.

The EU Energy Commissioner's warning that a best-case resolution would still take years to fully normalize is the most significant long-term signal yet from a credible official source. It suggests that even after a deal is reached, Gulf Coast operators will be working in a structurally tighter product market for longer than most had assumed.

Why Gulf Coast refinery margins have not collapsed

Since the conflict began February 28, Gulf Coast refinery utilization has stayed above 95 percent against a five-year seasonal average of roughly 82 percent. The WTI-Brent spread remains elevated from its pre-conflict level of roughly $6 per barrel. Middle distillate cracks remain near record highs. As of Wednesday morning, Brent is trading just below $99 and WTI is near $90 to $91.

Gulf Coast refiners run on domestic light shale crude from the Permian Basin priced at WTI. That crude does not transit the Strait of Hormuz. While Asian and Middle Eastern refineries have cut runs for lack of feedstock, Gulf Coast operators have run hard and sold diesel, jet fuel and gasoline into markets where supply is genuinely scarce. Valero, Marathon Petroleum, Phillips 66 and PBF Energy have been the primary beneficiaries, given their feedstock access, Colonial Pipeline connections and deep-water export terminals that supply Europe, Africa and Asia.

Valero has been running Venezuelan heavy crude through Chevron, sourcing up to 6.5 million barrels in March alone, making it the top foreign refiner of Venezuelan oil during that period. Venezuela's Merey blend was offered at roughly $10 below Brent in late March. Phillips 66 and Citgo were separately building direct purchasing agreements with PDVSA. That feedstock diversification is in place and holds regardless of how the ceasefire extension plays out.

Nearly 3 million bpd of Middle Eastern refining capacity is still shut. Physically damaged facilities take months to restart. The supply chain restocking process from March alone, when stocks outside the Middle East Gulf drew down by 205 million barrels, does not resolve in a week even if the Strait fully reopens.

What the ceasefire extension means for Gulf Coast refinery and petrochemical operators

The indefinite extension is neither a deal nor a breakdown. It buys time but resolves nothing. The core sticking points have not moved: Iran wants the U.S. naval blockade lifted as a precondition for Strait access, the U.S. wants free navigation through the Strait and a halt to Iran's nuclear enrichment program. The second round of talks never happened. Iran has not submitted the unified proposal Trump is waiting for.

Several European and Gulf Arab leaders have told Bloomberg they believe a comprehensive deal could take six months. Iran's parliament is reportedly preparing legislation that would permanently bar vessels from hostile countries from the Strait and require tolls from all others.

For Gulf Coast operators, an indefinite ceasefire extension without a deal means the current environment persists. Run rates stay elevated. Margins stay strong. Feedstock diversification strategies stay relevant. This morning's ship seizures reinforce rather than change that picture. The operators who have positioned well through the past several weeks are still in the best seat.

BIC Magazine will continue following this story

BIC Magazine has been covering the Strait of Hormuz crisis and its Gulf Coast implications since the conflict began February 28. The ceasefire has been extended. Two more ships were seized this morning. Talks have stalled. The Strait is still closed. Whatever happens next matters for energy markets, for Gulf Coast refining and petrochemical operations and for the contractors and service providers who work alongside them.

We will update as the situation develops. Read our full coverage series at bicmagazine.com, including what the Strait of Hormuz crisis means for Gulf Coast refiners and LNG exporters, the IEA's record 400 million barrel reserve release and the IEA April 2026 oil market report analysis.