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Informist, Saturday, Apr. 25, 2026

 

NEW DELHI – Gulf's crude oil production is likely to mostly recover within a few months after the Strait of Hormuz fully reopens, according to Goldman Sachs. However, it could take significantly longer for output to return completely to pre-war levels. Gulf oil output declined by 14.5 million barrels per day in April, or 57% of the pre-war supply, mainly due to precautionary shutdowns and stock management, and not physical damage to fields, the bank said Friday in a report.

 

The bank estimates that about 70% of lost output could be recovered within three months, and around 88% within six months. However, it cautioned that prolonged closures could result in slower output recovery, it added. "This reflects potentially more work on wells, slower procurement of depleted inputs, and destocking constraining transport capacity of new production for longer," the report said. 

 

If the strait remains open and safe with no renewed attacks, oil output could return relatively quickly, Goldman said. The spare capacity in Saudi Arabia and the United Arab Emirates will also support the faster resumption of pre-war production, it added.

 

However, output recoveries are subject to well performance and logistics. The region's available empty tanker capacity has declined by 50% or 130 million barrels, the bank said. This would affect the pace of transporting oil from fields to ports, once exports resume. 

 

The recovery prospects vary across countries, with Saudi Arabia potentially ramping up production faster, while Iran and Iraq may face greater risks due to reservoir characteristics, infrastructure challenges, and sanctions, the bank said.

 

Although a ceasefire between the US and Iran remains in effect, tensions at the Strait of Hormuz are high. Iran's Parliament speaker Mohammad Bagher Ghalibaf said Wednesday the strait will not reopen as long as the US naval blockade remains, calling it a "blatant violation of ceasefire."  End

 

Reported by Afra Abubacker

Edited by Deepshikha Bhardwaj

 

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