IEA warns Hormuz oil export recovery will take months

Oil exports through the strait of Hormuz are likely to take around two months to stabilise once the waterway reopens, the IEA estimates.

Disruptions to shipments through the strait due to the US-Iran war have forced producers in the Mideast Gulf to shut in part of their output because of limited alternative export routes.

The IEA estimates that the shut-ins cut global oil supply by 10.1mn b/d in March and forecasts a further 2.9mn b/d decline in April.

A sustained recovery in production depends on restoring exports through Hormuz. Laden tankers would first need to exit the Gulf, after which empty vessels inside the waterway would load cargoes and draw down stocks, the IEA said.

"It will be impossible to start upstream production or refining unless there is a foreseeable loading programme with adequate available storage at ports," the IEA said.

Tanker availability could slow that process. Around 390 vessels, including 210 laden tankers, were trapped in the strait when the conflict began on 28 February, the IEA said. Since then, a net 49 tankers have exited.

Many ballast tankers waiting outside Hormuz have since moved to other markets, meaning it could take longer for ships to return to pick up the first cargoes once exports resume, the agency added.

Iraq may face particular difficulties in restarting exports quickly because of limited storage capacity at its ports.

Upstream constraints could further delay a production recovery. Half of Mideast Gulf oil fields have "sufficient reservoir pressure and fluid characteristics" to return to pre-war output within about two weeks once exports resume, rising to 80pc after roughly one month, the IEA said.

The remaining 20pc may prove harder to restart because of issues such as "pressure depletion or flow impairment from wax or asphaltene deposition". Many of these more complex fields are in Iraq and Kuwait, the agency said, adding that some lost pre-war production may not return.

"Some fields may require specialised oil field services, including workovers, coiled-tubing units, chemical treatments or perforation," the IEA said.

Fields relying on secondary or enhanced oil recovery could face longer restart times because they depend on uninterrupted supplies of gas, power, steam and chemicals, the agency added.

By Aydin Calik