LONDON, May 29 (Reuters Breakingviews) – The U.S. and Iran are close to striking a deal, it seems. Reuters reported on Thursday, citing four sources familiar with the matter, that the two sides could extend a ceasefire by 60 days and lift restrictions on ​the Strait of Hormuz. Oil traders and equity investors may celebrate, but they risk getting ahead of themselves.

For one thing, the memorandum of ‌understanding may never be signed. U.S. President Donald Trump has yet to approve it, while Iranian state media said negotiations remain unfinished.

Even if a deal emerges, it may not restore the pre-war status quo of energy shipments. UBS Evidence Lab estimated as of Wednesday that tanker crossings were running at roughly four per day, compared with nearly 50 before the conflict. To get anywhere close ​to pre-war levels, mines must be cleared and vessels repositioned. Insurers, crucially, need to be assured that the risk of renewed attacks has receded.

Putting a ​timeline on all this is tricky, but Société Générale analysts have estimated that it could take roughly two months from a ⁠notional re-opening date before energy buyers actually get their oil. Shipping specialists and energy traders told Breakingviews that even this timeline may be optimistic.

The upshot is that oil ​supply and demand may still be out of balance when the possible new 60-day ceasefire is drawing to an end. That leaves a lot of room for things ​to go wrong. The reported terms of the deal, for example, suggest that the nuclear issue is not close to being resolved. Iran may still expect to have de facto control of Hormuz and the right to charge shipping tolls in the future. April showed how quickly a friendlier negotiating stance can reverse: both sides declared Hormuz open in the middle of the month, only for ​oil to rip higher in the following weeks as the stated free passage proved illusory.

The bigger problem is that the market’s shock absorbers are running out. Governments ​have already released more than 400 million barrels from emergency reserves. Those emergency stocks, and other buffers, are being depleted. The Brookings Institution estimates, opens new tab that, once all temporary measures are exhausted by July, the ‌market could ⁠be left absorbing a shortfall equivalent to roughly 16% of global crude trade. That could send Brent prices much higher than Friday’s $92 per barrel. So could any change of policy from China, which has so far cut crude purchases and refinery runs, freeing up barrels for other buyers.

Every month that passes, the global economy heads closer to a more painful oil crunch. If Iran believes this strengthens its bargaining position, the regime has every reason to play hardball on nuclear negotiations and other issues. It ​follows that a possible ceasefire extension is ​no solution to the Hormuz crisis. ⁠At worst, it may only postpone the reckoning.

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