Freight Rates Will Remain High Despite the Strait of Hormuz Reopening
Market Monday — Week 25 | Potential end of conflict in the Middle East won’t solve road freight problems
Despite European diesel prices retreating below €1.90 per liter following the announced US-Iran agreement on the Strait of Hormuz, ongoing carrier bankruptcies and severe capacity shortages guarantee that contracted road freight rates will not return to early-2026 levels.
Over the weekend, something happened that energy markets had been pricing in for days but that few in the transport industry had dared to plan around: the United States and Iran announced an agreement that, upon signing, is expected to reopen the Strait of Hormuz. Brent crude, trading within $103-113 USD per barrel in May and June, fell to around $83 today. Diesel prices across Europe have been retreating, reflecting the oil price decline and mitigation measures. Germany, which peaked at €2.44 per liter in late March, is now depending on the region, at around €1.80.
For carriers who have been absorbing a fuel cost shock of historic proportions since late February, this is real and welcome relief. But I want to be precise about what it is — and, more importantly, what it is not.
It is not a reset. It is not a return to the market conditions of January. And for anyone managing a transport budget, supply chain or fleet, treating it as such would entail significant risk.
How we got here, and why the asymmetry matters
When the military conflict involving the US, Israel, and Iran erupted on February 28, the Strait of Hormuz — which handles roughly 20% of global oil ocean traffic — faced a de facto blockade almost immediately. When trading opened on March 2, Brent spiked 10 to 12% in a single session. We wrote at the time that diesel markets exhibit a well-documented asymmetric behavior: they rise quickly on bad news and fall slowly when markets calm. That asymmetry is likely playing out exactly as described.
The reason for the asymmetry is structural, not accidental. Europe’s diesel supply network — rebuilt after the loss of Russian-sourced fuels — is a fragile, multi-leg import chain with lead times of three to six weeks. It embeds a permanent risk premium into every liter of imported product, leaving European prices highly sensitive to distant geopolitical events, shipping disruptions, and refinery outages in supplier regions. On top of that, Europe’s own domestic refining capacity has been eroding steadily.
This is why, even with Brent at $83 and a deal on the table, European pump prices will not return to January levels quickly. Mines need to be cleared from the Strait. Idled production fields need to be restarted. Damaged energy infrastructure in the Persian Gulf needs to be repaired. Full normalization of oil and, more importantly, refined products flows takes weeks to months, not days. The relief could be real, but the recovery is partial and slow.
Three trajectories, and what each means for contracted rates
The deal announced creates three distinct forward paths. Each has a materially different implication for transport costs, and I think it is worth being honest about the uncertainty rather than defaulting to the most comfortable scenario.
The first path is a clean reopening. The agreement holds, mine clearance and infrastructure repair proceed without major incidents, and tanker transits resume meaningfully by mid-July. In this scenario, Brent retreats toward the $70 to $80 range by the end of July — consistent with the pre-crisis fundamental picture of global oversupply that was the consensus before February 28. European retail diesel would fall toward €1.55 to €1.70 per liter across core markets by August, approaching but not reaching January levels. Germany could approach €1.65 to €1.70; France €1.75 to €1.80; the Netherlands €1.85 to €1.95. Governmental measures and subsidies will be suspended in this scenario.
For the contracted transport market, this means fuel floaters on contracted rates adjust downward in the July and August billing cycles — typically with a four to six week lag. The EU contract price index could retreat 2 to 3 index points from its current level of 141.
But I want to be clear about what this does not mean in my view: it does not mean a return to 2025 or January 2026 contracted transport rate levels. The structural capacity deficit — carrier bankruptcies, fleet underinvestment, driver shortages — remains fully intact and is the dominant pricing driver.
The second path is a stalled implementation. The deal faces obstacles, and tanker transits remain severely restricted through July, with only partial resumption. Brent stabilizes in the $88 to $96 range, below the crisis peak but well above pre-crisis levels. European retail diesel holds in the €1.80 to €2.00 range — essentially the current trajectory including governmental relief measures. Contracted rates plateau slightly below current levels. Fuel floaters remain elevated. And critically, the carrier liquidity pressure that has been driving bankruptcies continues. Every carrier that exits the market removes trucks that will not be replaced quickly.
The third path is a collapse of the agreement. The deal unravels and the Strait remains closed. Brent re-tests $110 and potentially approaches the $125 threshold we modeled in our Week 10 analysis. European retail diesel re-accelerates toward €2.10 to €2.30 per liter across core markets. The psychological €2.00 retail mark — which may trigger new government intervention — is breached again in Germany, France, and Belgium. Emergency fiscal measures return to the political agenda. For the contracted transport market, this means a second though lower wave of upward correction pressure in Q3.
I would not assign equal probability to these three paths. The deal seems real, and the market has already priced in meaningful progress, as today’s crude oil prices and stock markets show. But the obstacles to full implementation are also real, and the course of this conflict since February 28 has consistently delivered negative developments. The base case could also be a gradual, partial reopening that delivers meaningful but incomplete diesel relief through July. The tail risks in both directions remain significant.
The structural reality that no amount of diesel relief can fix
This is the part of the analysis I want to particularly emphasize, because it is the part most at risk of being obscured by the noise around the Hormuz deal.
The European transport market was already structurally tighter than at any point since 2022 before the crisis began. The FY2025 annual reports of Europe’s major publicly listed carriers — which we examined in detail last week — showed another year of declining road division margins, the fourth consecutive year of compression. Driver wages, tolls, and vehicle costs continued to rise across European lanes throughout 2025. Carriers with their own fleets and long contract cycles felt this first. Smaller operators, with less bargaining power and no diversified global businesses to cross-subsidize weakened road operations, were in even worse shape. Insolvency data from France, Poland, and Germany in this sector confirmed this throughout 2025 and into 2026.
The capacity index is currently 7 index points below year-ago levels, and the trend line has been accelerating downward in April. The Ziegler France bankruptcy and liquidation is not an isolated event. It is a template, seen in many countries. The ripple effects of a single, large carrier exit eliminate more capacity than the headline fleet reduction suggests, because subcontractors, depot networks, and driver pools are disrupted far beyond the headline numbers.
What the Hormuz crisis did was add a fuel cost shock on top of this already strained structure. It accelerated carrier bankruptcies that were already in the pipeline. It prevented fleet investments that were already unlikely. It widened the spot-to-contract spread at exactly the moment when contracted capacity was already being rejected at elevated rates. And it did all of this during a period of genuine demand growth.
The diesel relief, if it materializes fully, removes the acute fuel cost crisis from the equation. What remains is a market that was already running out of trucks before the crisis began — and has been made structurally tighter still by everything the crisis accelerated. A drop in diesel prices does not rebuild the fleets that were never ordered. It does not reverse the bankruptcies that have already been filed.
The Strait of Hormuz may be reopening. The European transport market’s structural tightening is not.
Christian Dolderer
Principal Domain Expert
Trimble Transportation (Transporeon)