Gulf Oil Output Down 57% as Goldman Sachs Sees Gradual Recovery After Strait Reopening

A significant portion of Gulf oil production could return within months once the Strait of Hormuz is safely reopened, according to a new assessment by Goldman Sachs, even as logistical and operational hurdles threaten to slow a full recovery.

The bank estimates that approximately 14.5 million barrels per day of crude production across Gulf states was offline in April, equivalent to roughly 57% of pre-crisis output levels, highlighting the scale of disruption triggered by the ongoing regional conflict.

Crucially, analysts noted that most of the shutdowns were precautionary rather than caused by direct infrastructure damage, a factor that could enable a relatively swift rebound once conditions stabilize.

According to the report, a secure and sustained reopening of the Strait of Hormuz would be the key catalyst for restoring flows. Provided that attacks on oil facilities do not resume, supply could recover within a relatively short timeframe.

Countries such as Saudi Arabia and United Arab Emirates are expected to play a central role in the rebound, thanks to their spare production capacity, which could accelerate the return of output.

However, the recovery is unlikely to be seamless. Goldman Sachs warned of several constraints that could delay exports even after production resumes. Among the most pressing is a sharp decline, around 50%, in the availability of empty oil tankers in the region, which could limit export capacity.

In addition, wells that have remained idle for extended periods may require technical interventions before returning to full efficiency, potentially slowing the ramp-up process.

The report suggests that Saudi Arabia is likely to lead the recovery effort, benefiting from stronger infrastructure and operational flexibility. In contrast, Iran and Iraq may face greater challenges tied to infrastructure constraints and operating conditions.

Based on a consensus of international estimates, Gulf producers could recover around 70% of lost output within three months of reopening the strait. That figure may rise to approximately 88% within six months, signaling a steady, though not immediate, return to pre-crisis production levels.

While the outlook points to resilience in Gulf energy systems, the pace of recovery will ultimately hinge on regional security conditions, shipping capacity, and technical readiness, leaving global oil markets closely watching developments in one of the world’s most critical energy corridors.