Energy experts warn of slow oil and gas supply recovery after Iran deal
Strait closure disrupts global energy flow
Poinews.com – Following the recent agreement with Iran, energy specialists have cautioned that the restoration of oil and gas supply chains may take several months. Delays in oil transportation and refining processes, combined with concerns over safe passage through the strait, suggest that any improvement will not occur swiftly, they noted.
Ships carrying crude oil have remained blocked in the Persian Gulf for over three months, unable to navigate the vital waterway. This route, which previously accounted for roughly 20% of global oil and gasoline shipments, has been rendered impassable, causing widespread disruption.
“It’s going to take time for people to feel comfortable and for insurance to be in place … particularly to get people on the ground to restart some of these assets,” said Daniel Evans, global head of fuels and refining research at S&P Global Energy.
Market reactions reflect lingering uncertainty
Oil prices declined shortly after the deal’s announcement, with Brent crude falling $3.45 to $83.89 per barrel and US benchmark crude dropping $4.03 to $80.85 per barrel. However, these levels remain significantly higher than the approximately $70 per barrel seen before the conflict began.
Experts highlighted that the process of unloading stranded vessels, moving new tankers into position, and delivering crude to refineries is inherently slow. The journey from the strait to distant markets involves extended timelines, as it takes months for oil to be processed and transported to its final destination.
“To bring a ship in, you need to be confident that you’ve got a big enough window of safety to bring it in, load it and move it out,” explained Evans.
Regional disparities in recovery timelines
While countries like Saudi Arabia and the United Arab Emirates, which have alternative shipping routes, may resume production more quickly, others face greater challenges. Alan Gelder, senior vice president at Wood Mackenzie, noted that Iraq could encounter prolonged difficulties due to extensive shutdowns and complex extraction conditions.
Shut-in operations in the Middle East have paused production in some regions due to storage limitations. Restarting these activities requires careful planning, as the infrastructure and logistics involved are not easily reversed.
“But places like Iraq could be much more challenged because they’ve had a much bigger shut-in, their fields are more difficult … it may well take about a year before they get back,” Gelder added.
Investment delays complicate long-term recovery
Investment in the energy sector has stalled since the strait’s closure, according to Gelder. This pause means the revival of production will depend on the resumption of capital spending, which can take years to materialize.
Analysts emphasized that producers will wait for assurance of stability before restarting operations. “Countries that shut in oil production won’t want to restart until they know there is a stable, durable situation in the strait, and that a ceasefire will last more than 30 or 60 days,” said Daniel Sternoff, a senior fellow at Columbia University’s Center on Global Energy Policy.
“We don’t know what open means or what the speed of evacuation of trapped material is going to be,” Sternoff concluded.
