Hormuz Crisis May Leave Lasting Scars on Global Oil Production

A petroleum geologist warns that the ongoing conflict in the Strait of Hormuz may have far-reaching consequences for global oil production, even if a political agreement is reached to end the fighting.

According to Art Berman, an energy consultant with over four decades of experience, millions of barrels of Persian Gulf oil production remain shut-in and restoring those wells is a complex process that could take weeks or months.

Berman estimates that 80% of affected wells could return close to their previous production levels, but some may never recover. The International Energy Agency (IEA) has also assessed the impact of the conflict on oil production, reporting that Gulf oil production rose by 2.5 million barrels per day in July, still 8.3 million barrels per day below pre-war levels.

Wood Mackenzie is more optimistic about the recovery, projecting that fields affected by the Hormuz closure could return to approximately 70% of their previous production within three months and 90% within six months.