Iran war: How long before Gulf nations stop pumping oil?
Iran War: How Long Before Gulf Nations Stop Pumping Oil?
Oil prices surged past $120 following attacks on Iran’s energy infrastructure and the disruption of the Strait of Hormuz. With tankers immobilized and key oil facilities damaged, Gulf producers now face limited storage options to keep operations running. The market saw prices climb to $119.50 per barrel on Monday after Israel targeted Iranian energy sites over the weekend, while Tehran named Mojtaba Khamenei as its new Supreme Leader. However, prices later retreated to around $100, and by Tuesday, had dipped below $90, though still reflecting a 20% increase since the war began on February 28.
The intensifying conflict has heightened fears of damage to Middle Eastern energy systems. Producers are already dealing with the aftermath of Iranian strikes on facilities, airports, and US military installations. Meanwhile, the Strait of Hormuz—crucial for global oil flow—has been effectively closed, according to Kpler, a shipping analytics firm. This vital waterway, which accounts for about 20% of the world’s oil supply, has caused significant delays, creating a worst-case scenario for energy markets.
Escalating Tensions
The US-Israeli war with Iran has drawn Gulf states into the fray. Saudi Arabia, the UAE, Qatar, Kuwait, and Bahrain have been directly impacted by the conflict, with their oil infrastructure under threat. Iran’s strikes on energy sites, alongside attacks on US bases, have fueled accusations of betrayal and raised the possibility of retaliatory strikes. The closure of Hormuz has further disrupted commerce, as nearly all tankers are grounded.
“Tehran will determine the end of the war,” declared the Iranian Islamic Revolutionary Guard Corps (IRGC). “We will not allow one litre of oil to be exported from the region if US and Israeli attacks continue.”
With oil and LNG shipments stalled, Gulf producers are racing against time to preserve their reserves. JP Morgan estimates that collectively, these nations can store about 343 million barrels of oil, enough to delay a shutdown for roughly 22 days. However, daily flows through Hormuz—around 15 million barrels of crude and 4 million of refined products—mean this buffer is shrinking rapidly.
Storage Capacities Under Strain
Saudi Arabia, which had 66 days of storage capacity on February 28, faces a tighter margin as it reroutes exports via the Red Sea. Rystad Energy suggests the kingdom may have only seven to nine days before forced output cuts. The UAE, meanwhile, is redirecting some shipments through Fujairah, though that port was also hit by Iranian strikes. These alternate routes account for just a third of usual Hormuz traffic.
Production cuts have already begun. Saudi Aramco reduced output by up to 2.5 million barrels per day, while the UAE cut by 500,000 to 800,000 barrels daily. Kuwait also trimmed its exports by half a million barrels per day. Iraq, with just six days of storage, has likely exhausted its reserves, prompting output reductions of about 2.9 million barrels per day, as reported by Bloomberg News.
