(April 14): Top Arab Gulf oil producers can return half of shut fields to prewar levels of production within two weeks once transits through the Strait of Hormuz resumes, the International Energy Agency said.
Resumptions are likely to rise to 80% over another month but would be dependent on companies mobilising labour and contractors, and the normalisation of supply chains, the IEA said in its monthly oil market report. Restarting the remaining 20% would be more challenging because of a reduction in pressure in the fields and other constraints, it said Tuesday.
Restoring output most crucially hinges on safe and sustained vessel transit through the Strait of Hormuz, which has become more complicated following a US blockade. Iran practically shut down the world’s most important waterway at the beginning of the war, forcing countries to slash production as storage tanks started to fill. Some countries preemptively cut output with the aim of a quicker resumption once the war ends.
“First, oil-laden tankers will need to move out of the Gulf,” the IEA said in its report Tuesday. “Vessels currently ballasting in the Gulf could then load and drawdown stocks. It will be impossible to start upstream production or refining unless there is a foreseeable loading programme with adequate available storage at ports.”
More than nine million barrels a day of oil production from key Middle Eastern countries including Saudi Arabia, Kuwait and the United Arab Emirates were expected to be halted in April, according to estimates from the US government. The IEA said about 8.9 million barrels a day of oil production was shut in March for Gulf members of the Opec+ group.
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