Oil and gas supplies could take months to return to normal after Iran deal, energy experts say
Experts say more than 10 million barrels a day of shut-in Middle East production will need months of cautious ramp-ups before supply normalizes.
- Despite the expected reopening of the Strait of Hormuz on Friday, experts caution that oil and gas trade will take months to return to pre-war levels, marking only the beginning of a long recovery for the industry.
- Middle Eastern producers have been forced to shut in more than 10 million barrels per day of oil production since the Strait was closed three and a half months ago, requiring slow, controlled restart operations.
- Wood Mackenzie analysts estimate affected fields could return to 70% of production within three months and 90% within six months; Iraq faces slower recovery than Saudi Arabia or the UAE due to Basrah export infrastructure constraints.
- Gas prices remain more than a dollar higher than this time last year, with the average gallon in Connecticut at $4.23, down 10 cents from a week ago and 40 cents from a month ago.
- Daniel Sternoff, senior fellow at Columbia University's Center on Global Energy Policy, stated the speed of evacuation for trapped material remains unclear, as shipping and insurance companies are reluctant to lower prices until the peace deal proves durable.
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The prospect of an agreement between the United States and Iran relieves operators, while world stocks have fallen sharply.
With reports indicating that the U.S. and Iran electronically signed a memorandum of understanding on ending the war on the 14th, there have been no significant changes yet in the tightly closed Strait of Hormuz. International shipping companies estimate that it could take several months for merchant ships stranded inside the strait to move out and for the oil to be delivered to consumers, the final buyers.
Peace deal could buoy world economy, though oil prices are still uncertain
The global economy was the clear loser from the U.S.-Israeli conflict with Iran, as oil prices surged. The expected peace deal would reopen the Strait of Hormuz, though a full restoration of oil flows could take months.
IMF Says Still on 'High Alert' for War Impact After Iran-US Deal
(Bloomberg) — The International Monetary Fund said it remains on “high alert” over fallout from the Middle East war on the global economy, warning that energy supplies will take time to recover even as the US and Iran announced an agreement to reopen the Strait of Hormuz.
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