- Around 11 million b/d of shut in oil production faces weeks of logistical constraints before upstream recovery can accelerate.
- LNG supply remains uncertain as Qatar restart timelines stretch to late August and 14 cargoes await transit.
- Shipping, insurance and security conditions in the Strait of Hormuz remain critical to market stabilisation.
The recovery of oil and gas production across the Middle East is expected to take several months despite the announcement of a two week ceasefire, with export logistics emerging as the primary bottleneck in the early stages.
According to Wood Mackenzie, the restoration of approximately 11 million b/d of upstream oil production will depend first on the normalisation of maritime flows through the Strait of Hormuz. A functional transit system supported by vessel insurance, trade financing and sustained ship movement is required before global markets can access stranded crude volumes.
Shipping dynamics are expected to dictate the pace of initial recovery. While laden vessels are incentivised to exit the Gulf as soon as conditions allow, uncertainty remains over how quickly safe transit operations can resume. Ballast vessels, required to reload crude, are likely to delay entry until conditions stabilise, limiting the immediate availability of export capacity.
Onshore storage also presents a constraint, as inventories cannot be rapidly transferred to vessels due to loading rate limitations. As a result, export flows will ramp up gradually rather than immediately following any improvement in security conditions.
As shipping constraints begin to ease, attention will shift to upstream production challenges. Storage capacity across key producers varies significantly, with Saudi Arabia and the UAE holding close to one month of storage, while Iraq and Kuwait have less than two weeks. This disparity will influence the speed at which production resumes.
Initial field recovery is expected to exceed export capacity in the early phase. However, longer term recovery profiles will diverge between countries. In Iraq, a return to pre disruption production levels could take between six and nine months due to reservoir complexity and operational limitations.
In other markets, upstream infrastructure has remained largely intact, but downstream facilities such as refineries may require repairs, further delaying full system recovery. While some production gains will materialise quickly, a return to previous output highs is expected to take considerably longer.
Operational risks also remain during the restart phase. Rapid attempts to restore production could damage reservoirs and wells, particularly where shutdowns were not fully controlled. Technical challenges including pressure imbalances, water breakthrough and equipment failures may slow progress.
Despite these risks, major producers such as Saudi Arabia and the UAE retain spare capacity, providing some flexibility to offset disruptions. However, even these producers are likely to remain constrained by export logistics rather than upstream capability in the near term.
In the gas sector, the ceasefire has introduced some downward pressure on global prices, but supply fundamentals remain largely unchanged. Fourteen LNG cargoes remain stranded in the Gulf, awaiting clearance to transit through the Strait of Hormuz.
A meaningful shift in global LNG supply will depend on the restart of Qatar’s Ras Laffan facility. Wood Mackenzie estimates that if restart activities begin in early May, full restoration of all 12 operational trains could take until the end of August. A partial restart of the North site could be achieved within just over one month, while the South site, which has sustained damage, will take significantly longer. The South site’s capacity has already been reduced from 36 mtpa to 24 mtpa, with two damaged trains expected to remain offline for several years.
In the UAE, ADNOC’s 5 mtpa Das Island LNG facility is expected to return to service relatively quickly. However, domestic gas infrastructure, particularly at Habshan, has experienced more severe disruption, potentially requiring extended repair work. Prolonged outages could impact domestic supply, forcing adjustments such as reduced reinjection or increased pipeline imports.
Overall, the scale and complexity of the shutdown across the region is unprecedented. While contingency plans are in place, the recovery process will vary significantly by field and operator, influenced by reservoir conditions, infrastructure integrity and the availability of skilled personnel.
Although most production is expected to be restored over time, the combination of logistical constraints, technical risks and infrastructure damage means that a full recovery will be gradual and uneven across the region.
Author: Bryan Groenendaal
