Gulf crude oil production is projected to rebound significantly within months following the reopening of the Strait of Hormuz, according to research from Goldman Sachs. However, while initial recovery may be swift, reaching pre-war production levels may require a longer timeframe, particularly if tensions in West Asia persist and the strategic waterway remains closed for an extended period.
Goldman Sachs estimates that Gulf oil output has decreased by 14.5 million barrels per day (mbd), a reduction of 57 percent from pre-war levels. The investment bank suggests that a rapid recovery is feasible, provided there are no further attacks on oil production sites and the Strait reopens safely in the near future.
Nevertheless, the report indicates that the latter stages of recovery could be extended, particularly if the closure persists. The pace of recovery is expected to depend on factors such as transportation logistics and well flow rates. Once the Strait reopens, key constraints will likely include pipeline capacity, the availability of tankers to transport previously produced oil, and the mobilization of materials and workforce for field operations.
Goldman Sachs points out that the capacity of available empty tankers in the Gulf has fallen by approximately 50 percent, equating to 130 million barrels, since the onset of the conflict. Historical data shows that oil flows through the Strait of Hormuz peaked at 23.3 mbd, compared to a typical rate of 20 mbd, with the capacity for pipeline redirection running at an additional 3.5 mbd above normal levels.
Further complications arise from forced curtailments, which can create reservoir challenges, necessitating intervention and workover tasks before production can return to previous levels. The longer the closure lasts, the more extensive and time-consuming the needed work will be, particularly in acquiring depleted materials such as drill pipes.
Goldman Sachs identifies three primary factors that may support a relatively rapid recovery. First, there is limited publicly reported damage to oil fields in comparison to liquefied natural gas (LNG) assets. Second, statements from Saudi Aramco’s President and CEO in March suggest a swift ramp-up potential for Saudi production. Third, historical trends indicate that Saudi Arabia and the UAE are likely to utilize their spare capacity to stabilize market conditions.
Despite these factors, the report advises caution, noting that a complete recovery may take several quarters and is at risk of being partial after a prolonged closure. Variability in reservoir characteristics across Gulf oil fields, with countries like Iran and Iraq believed to rely more heavily on fields with lower reservoir pressure, adds complexity to the restart process. Additionally, differences in infrastructure quality, maintenance levels, and sanctions risk vary significantly among the nations involved.
Goldman Sachs highlights that past supply disruptions have yielded mixed results regarding recovery speed and extent. They observe that the current situation is unprecedented, and average external forecasts from the Energy Information Administration (EIA) and the International Energy Agency (IEA) project a recovery of 70 percent of lost production within three months of reopening and 88 percent after six months.
While Goldman Sachs does not classify this as its baseline scenario, it warns that the potential for “scarring” to oil production capacity could increase if hostilities resume, referencing patterns observed in several of the five largest oil supply shocks in history.
Published on April 25, 2026.
