Gulf oil production has taken a severe hit from the ongoing Iran conflict, with Goldman Sachs estimating that 14.5 million barrels per day—roughly 57% of pre-war supply—remained offline as of April. The disruption, centered on the Strait of Hormuz, a critical chokepoint for a fifth of global oil flows, has sparked concerns over sustained pressure on energy markets.
The bank projects a staggered recovery even if the strait reopens fully and no further attacks target oil infrastructure. Under optimal conditions, Gulf producers could restore about 70% of lost output within three months and 88% within six months, supported by spare capacity in Saudi Arabia and the United Arab Emirates. But hurdles loom large, with logistics and well performance posing significant constraints.
One major bottleneck is tanker capacity, which has plummeted by 50%, or around 130 million barrels, in the Gulf region. This shortage limits how quickly producers can ship oil once exports resume. Prolonged well shut-ins also threaten output, especially in lower-pressure reservoirs, where flow rates could drop without extensive workovers.
Recovery timelines vary sharply by country. Saudi Arabia is positioned to ramp up production faster due to robust infrastructure, while Iran and Iraq face steeper challenges from reservoir issues, aging facilities, and sanctions. Goldman cautioned that the longer production stays curtailed, the greater the risk of permanent damage to supply capabilities.
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Energy markets remain on edge as the conflict’s fallout ripples through global supply chains. The Strait of Hormuz’s pivotal role means any delay in reopening could exacerbate price volatility, with Brent crude already reflecting heightened geopolitical risk premiums. Goldman’s analysis suggests that even a best-case scenario will test the resilience of producers and logistics networks.
The stakes are underscored by the scale of the current shortfall. With 14.5 million barrels per day still offline, the gap represents a substantial slice of pre-conflict Gulf output, and full restoration could stretch well into late 2026 if complications persist.
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