Goldman Sachs: Gulf Oil Recovery Months After Hormuz Reopens

The Strait of Hormuz typically handles a fifth of global oil flows, making its disruption critical for energy markets. Goldman Sachs states a safe and sustained reopening, absent renewed attacks on infrastructure, enables a relatively quick return of production, supported by spare capacity in Saudi Arabia and the United Arab Emirates.

However, recovery faces logistical and well performance constraints. Available empty tanker capacity in the Gulf has dropped by 130 million barrels, a 50% reduction, limiting the speed at which producers can move oil once exports resume.

Prolonged well shut-ins risk reduced flow rates, particularly in lower-pressure reservoirs, necessitating workovers before full output restoration. Goldman Sachs emphasizes that the longer production remains curtailed, the slower the recovery will be.

Recovery prospects vary by country; Iran and Iraq face greater risks due to reservoir characteristics, infrastructure challenges, and sanctions, while Saudi Arabia can ramp up output faster. External agencies forecast Gulf producers will recover about 70% of lost output within three months and approximately 88% within six months, though a prolonged closure increases the risk of lasting supply damage.