The planet has lost crude oil worth over $50 billion that has not been produced since the start of the Middle East war nearly 50 days ago, and the crisis impacts will be felt for months, even years, according to analysts and Reuters calculations.
Iranian Foreign Minister Abbas Araghchi announced Friday that the Strait of Hormuz reopened following a ceasefire agreement in Lebanon, while US President Donald Trump stated he believes an agreement to end the war in Iran will come “soon.” However, the opening of the Strait of Hormuz lasted less than 24 hours. Tehran announced yesterday it closed this strategically important maritime route again, in retaliation, as it said, for the American blockade of Iranian ports.
The landscape for an end to the war remains murky.
The largest energy supply disruption in modern history
Since the crisis began in late February, more than 500 million barrels of crude oil and condensates have been removed from the global market, according to Kpler data – the largest energy supply disruption in modern history.
In other words, the loss of 500 million oil barrels from the market is equivalent to:
* Reducing demand for air travel globally for 10 weeks; zero road trips from any vehicle globally for 11 days; or no oil for the global economy for five days, said Ian Mowat, a Wood Mackenzie analyst.
* Nearly one month of oil demand in the US, or more than one month of oil for all of Europe, according to Reuters estimates.
* About six years of fuel consumption for the US military, based on annual usage of approximately 80 million barrels from fiscal year 2021.
* Enough fuel to operate the global international shipping industry for about four months.
Gulf Arab countries lost 8 million barrels daily of crude oil production in March
Key facts:
* Gulf Arab countries lost about 8 million barrels daily of crude oil production in March, a quantity nearly equivalent to the combined production of Exxon Mobil and Chevron, two of the world’s largest oil companies.
* Jet fuel exports from Saudi Arabia, Qatar, the United Arab Emirates, Kuwait, Bahrain and Oman decreased from about 19.6 million barrels in February, to just 4.1 million barrels for March and April so far combined, according to Kpler data. These exports would be sufficient for about 20,000 round-trip flights between New York’s JFK airport and London’s Heathrow, according to Reuters estimates.
* With crude prices averaging around $100 per barrel since the war began, these missing volumes represent about $50 billion in lost revenue, said Johannes Raubol, an analyst at Kpler. This is equivalent to a 1% reduction in Germany’s annual GDP or roughly the total GDP of smaller countries like Latvia or Estonia.
Full recovery may take years
Even with an opening of the Strait of Hormuz, production and flow recovery is expected to be slow.
Global onshore crude oil inventories have decreased by about 45 million barrels so far in April, according to Kpler.
Since late March, production outages have reached about 12 million barrels per day. Oil fields in Kuwait and Iraq could need four to five months to return to normal operating levels, extending inventory draws during the summer, Raubol said.
Damage to refining capacity and Qatar’s Ras Laffan LNG complex means full restoration of regional energy infrastructure could take years.
