The announcement of a preliminary agreement between the United States and Iran has eased concerns over global energy supplies and triggered a sharp decline in oil prices. Yet industry experts warn that the region’s energy sector will require a prolonged recovery period before operations fully normalize.
While the proposed deal could reopen the Strait of Hormuz and restore trade routes, significant challenges remain across production, refining and natural gas infrastructure.
Strait of Hormuz Reopening Marks First Step
President Donald Trump has indicated that the Strait of Hormuz could reopen as early as Friday, alongside the lifting of the U.S. blockade on Iranian ports.
Iranian officials have also pointed to broader negotiations during a planned 60-day ceasefire, including discussions over sanctions relief and longer-term regional stability.
Although markets welcomed the development, the reopening of shipping routes represents only the beginning of the recovery process.
Oil Output Recovery Will Be Uneven
The conflict forced major Gulf producers to suspend substantial volumes of crude production.
According to the International Energy Agency, more than 14 million barrels per day remain offline, equivalent to around one-seventh of global demand.
Some fields may restart quickly, particularly in Iraq, but analysts expect many assets to take months before reaching previous production levels.
“Assuming operators choose a measured and controlled ramp-up, our analysis suggests the fields affected by the Strait’s closure could get back to 70% of prior production within three months and to 90% within six months. The last 1 million bpd or so will take considerably longer,” analysts at Wood Mackenzie said.
Damaged Refineries Could Delay Recovery
Refining operations have emerged as another critical challenge.
Industry estimates suggest that more than 3.5 million barrels per day of refining capacity were offline during the conflict, with some facilities suffering physical damage.
While precautionary shutdowns may be reversed relatively quickly, repairing damaged infrastructure could become a multi-year process in certain cases.
Rystad Energy estimates that total repair costs across the region may approach $46 billion.
LNG Capacity Restoration Could Take Years
The natural gas sector faces similar difficulties.
Qatar and other LNG exporters were forced to scale back operations following attacks on critical infrastructure. Restarting LNG facilities requires a gradual process that can take weeks even under ideal conditions.
Moreover, QatarEnergy has warned that approximately 17% of the country’s LNG production capacity could remain affected for up to five years.
Global Stockpiles Must Be Rebuilt
Another challenge will be replenishing oil inventories that were depleted during the conflict.
According to market observers, stock levels across major economies have fallen sharply as lost Gulf production tightened supply.
“It will take several months to fully normalise flows, and we estimate that global oil inventories have shrunk by more than 1 billion barrels since the start of the conflict,” said Paul Gooden, head of natural resources at investment manager Ninety One.
“Oil markets will therefore likely suffer a ‘hangover’ for several years as governments seek to rebuild inventories and to insulate themselves from further geopolitical shocks.”
Even if exports resume quickly, analysts believe the global energy market will continue dealing with the after-effects of the conflict well into the future.
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