• Gulf crude production has dropped by 14.5 million barrels per day, about 57% below pre-war levels, according to Goldman Sachs.
  • Recovery could take months even after the Strait of Hormuz reopens, constrained by tanker shortages and potential well damage.
  • Forecasts from EIA and IEA suggest only 70% recovery after three months and 88% after six months.

Output Shock Deepens

Goldman Sachs analyst Daan Struyven warned that the Gulf's crude output has suffered a massive blow, with production falling by 14.5 million barrels per day—roughly 57% below pre-war levels. The recovery timeline, he said, hinges on a safe reopening of the Strait of Hormuz and an absence of further attacks. “Without a deal, the company would be forced into bankruptcy,” Struyven said, referring to the broader regional supply chain.

Tanker shortages are a major bottleneck. Available capacity has already dropped about 50%, complicating efforts to restart shipments. Even if the strait reopens, repairs to damaged wells and infrastructure could take months, according to people familiar with the matter.

Recovery Forecasts

The Energy Information Administration and International Energy Agency project a gradual rebound: about 70% of lost output within three months and 88% within six, assuming no renewed conflict. Goldman’s own models align with these estimates, though the bank warns that renewed hostilities could cause lasting damage to production capacity.

“Efforts to restore production have hit a snag,” a source close to Gulf producers said, noting that spare capacity from other Gulf producers may help but won't fully offset the shortfall. The region's national oil companies have not commented on specific restart timelines.

Market Implications

Brent crude futures have surged on the news, with traders pricing in a prolonged supply gap. The disruption comes at a time when global inventories are already tight, raising the risk of further price spikes. Analysts caution that without a swift resolution, consumers and energy-intensive industries will face sustained higher costs.

Correction: An earlier version of this article misstated the percentage drop. The correct figure is 57% below pre-war levels.