Solving the energy crisis, the reopening of the Hormuz Strait is just the "beginning."
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The ceasefire agreement may quiet the gunfire, but the massive destruction to Middle Eastern energy infrastructure has already dragged the global oil and gas market into a protracted supply crisis. The reopening of the Strait of Hormuz is merely the starting point for a long road to recovery.
On April 8, according to the Wall Street Journal, the Iran war has severely damaged dozens of refineries, oil fields, and natural gas export terminals in the region. The International Energy Agency estimates that more than 40 key energy assets have been damaged, creating the largest supply disruption in history. Research institute Rystad Energy estimated last month that repairing the region’s energy infrastructure will cost more than $25 billion.
After the ceasefire was announced, global benchmark Brent crude oil plummeted about 12% on Wednesday to $96 per barrel, but remained well above the roughly $60 level seen in early January.
Consulting firm Eurasia Group predicts that even if hostilities end, oil prices will remain above $80 a barrel this year. Henning Gloystein, the group’s Managing Director for Energy, said, "Even if a Middle East ceasefire allows the Strait of Hormuz to quickly reopen, supply pressures will persist."
Refining capacity severely damaged, fuel shortages may persist for months
According to reports, after the ceasefire, the main challenge facing the global market is not crude oil transport, but sharp reductions in refining capacity.
Gloystein estimates that about one-third of Gulf refineries were damaged in air raids, and said this production loss "will take at least months to repair." Even if oil-producing nations resume pumping, markets will still face shortages of finished fuels such as diesel, gasoline, and jet fuel.
One of the most seriously damaged facilities is the Ruwais refinery in the UAE—one of the world’s largest. Rystad estimates that damage is concentrated in the western zone, which accounts for half of the total capacity; full recovery is expected to take months.
Kuwait's situation is equally dire. Gloystein noted that damage to Kuwait’s refineries has led to shortages of marine fuel and jet fuel in Asia and Europe.
Last week, a drone attack sparked a fire at the Mina Al-Ahmadi refinery, and combined with several incidents in March, losses have further expanded. The CEO of Kuwait National Petroleum Company said last month that after the war ends, it will take three to four months to resume full production.
In Bahrain, state-owned energy company Bapco Energies declared force majeure and suspended contractual obligations after a fire at the Sitra refinery last month. This refinery, with a daily capacity of about 400,000 barrels, had just completed an upgrade, and the damage has dealt a major blow to Bahrain’s refining capability.
LNG facilities heavily damaged, Qatar repairs may extend to 2030
The report points out that the blow to the liquefied natural gas sector is especially devastating. Ras Laffan in Qatar is one of the world’s largest LNG facilities; Iranian attacks crippled about 17% of its capacity. Rystad Energy says full repairs may not be completed until around 2030, with costs reaching about $10 billion.
Qatar Energy confirmed that two of Ras Laffan’s fourteen LNG liquefaction trains were damaged. Data provider Kayrros analyst Saeed Ali Muneeb analyzed satellite images, finding that a large cryogenic heat exchanger on one train collapsed, while the other suffered severe burn damage.
Cryogenic heat exchangers are highly customized units, as tall as a 15-story building, over 15 feet in diameter, and packed with thousands of miles of precision piping inside.
Exponent consulting firm engineer Harri Kytömaa said, "Once damaged, a new unit must be manufactured." Manufacturing replacements alone may take more than a year.
Additionally, the gas turbines that drive LNG compression lines now have delivery times of several years, due to strong demand from data centers.
Also in Ras Laffan, Shell’s high-margin Pearl gas-to-liquids facility was heavily damaged; the company said one of its two production lines will be shut for at least one year.
Reports state that the energy crisis has also impacted ports and upstream production. The UAE’s Fujairah port, a key oil terminal outside the Strait of Hormuz and a hub for storage, trading and bunkering, has been repeatedly hit by Iranian drone strikes, with intermittent operations.
On the upstream side, due to inability to ship crude oil, Iraq, Saudi Arabia, Kuwait, UAE, Qatar, and Bahrain shut down a combined 7.5 million barrels per day of crude production in March, according to U.S. Energy Information Administration data.
Sudden well shut-ins are geologically risky: abrupt pressure drops can clog wells with heavy wax and restarting requires costly chemical treatments. In some older fields, such shocks can permanently alter reservoir dynamics, causing irreversible production loss.
Rebuilding bottlenecks multiply, cash and talent in crisis
Surface reconstruction faces multiple bottlenecks stacking up. Custom transformers, valves, and gas turbines require years to replace even in peacetime, while most specialized engineers and welders have left the conflict zone with Western contractors, creating a talent shortage hard to fill quickly.
Wood Mackenzie upstream analysis director Fraser McKay said repair bills will erode the nearly $100 billion that the oil and gas industry had planned to invest in the region this year—covering everything from routine maintenance to new development projects.
He noted companies will prioritize repair work and delay growth projects, while competing with the wider energy industry for equipment and engineering talent, which will further drive up costs.
"It’s not just a money issue. It’s a people issue," McKay said. "You can’t just double the deployable capacity for the region overnight."
Kytömaa was frank about the scale of destruction: "We've never seen anything like this." The ceasefire may signal the end of fighting, but for the global energy market, the real test is just beginning.
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