Written and reviewed by Kevin Nerway · Last verified 24 April 2026
Key Takeaways
- Approximately 14.5 million barrels per day (bpd) of Gulf crude production was offline in April 2026, representing 57% of the region's pre-war supply.
- Goldman Sachs estimates that 70% of this lost production could be restored within three months of a safe reopening of the Strait of Hormuz.
- Logistics remain a significant bottleneck, as available empty tanker capacity in the Gulf has plummeted by 50%, or 130 million barrels.
- Saudi Arabia is positioned to restore output faster than regional peers like Iran and Iraq due to superior infrastructure and spare capacity.
Goldman Sachs Projects Multi-Month Timeline for Supply Restoration
Financial markets are closely monitoring the potential for an energy supply rebound following the reopening of the Strait of Hormuz. According to a research note from Goldman Sachs, the recovery of Gulf oil production is expected to be a phased process rather than an overnight restoration. While the bank notes that much of the curtailment resulted from precautionary shutdowns rather than physical destruction of oilfields, the sheer scale of the disruption-affecting over half of the region's output-requires a complex logistical restart.
Traders utilizing professional-grade market research will note that the Strait of Hormuz typically handles 20% of global oil flows. The bank's baseline forecast suggests that while 70% of production could return in 90 days, reaching the 88% recovery mark could take up to six months. This timeline is contingent on a "safe and sustained" reopening without renewed attacks on critical energy infrastructure.
Logistical Bottlenecks and Tanker Capacity Constraints
Even if the physical transit routes are cleared, Goldman Sachs warns that the "plumbing" of the global oil market has been severely restricted. The report highlights a 50% reduction in available empty tanker capacity within the Gulf, a drop of 130 million barrels. This lack of transport vessels creates a hard ceiling on how quickly producers can move extracted crude to international markets.
For those managing a funded account, this supply-side lag suggests that price volatility may persist even after geopolitical tensions appear to ease. The bank also pointed to technical risks at the wellhead; prolonged shut-ins in lower-pressure reservoirs may require extensive "workovers" before flow rates return to pre-conflict levels. This technical friction means the longer the taps stay closed, the higher the risk of permanent damage to reservoir productivity.
Market Impact Snapshot
| Asset | Direction | Confidence |
|---|---|---|
| Crude Oil | Bearish (Long-term) | Medium |
| USD/CAD | Bearish | Medium |
| CAD/JPY | Bullish | Low |
| Global Energy Stocks | Bullish | Medium |
Divergent Recovery Paths for Saudi Arabia and Iraq
The recovery will not be uniform across the Middle East. Goldman Sachs explicitly identifies Saudi Arabia and the United Arab Emirates as the primary drivers of a rapid rebound, citing their significant spare capacity and more resilient infrastructure. Conversely, Iran and Iraq face a much steeper climb. These nations are hampered by specific reservoir characteristics that make restarts technically difficult, as well as ongoing infrastructure challenges and international sanctions.
This divergence is a critical factor for those using institutional order flow data to position in commodity-linked currencies. The speed at which Saudi Arabia can ramp up could offset the slower progress in Iraq, potentially stabilizing global supply faster than the broader market expects. However, the bank cautioned that any "prolonged closure" of the strait significantly raises the risk of lasting supply destruction.
Practical Context for Prop Firm Traders
As supply begins to trickle back into the market, traders should expect a shift from geopolitical risk premiums to fundamental supply-and-demand metrics. Volatility is expected to remain high during the initial "reopening" phase as the market gains clarity on actual export volumes versus projected recovery rates.
Before engaging in high-leverage commodity trades, it is wise to compare drawdown rules across firms to ensure your strategy can withstand the gap-risk associated with weekend news regarding the Strait. Additionally, checking challenge difficulty rankings can help traders determine which platforms offer the best environment for navigating the volatile energy sector during this transition period.
Frequently Asked Questions
How much oil is currently offline in the Gulf?
According to Goldman Sachs, approximately 14.5 million barrels per day were offline as of April 2026. This accounts for roughly 57% of the total pre-war supply from the region.
Why will it take months for oil production to return to normal?
Recovery is slowed by a 50% reduction in available tanker capacity and potential damage to lower-pressure oil reservoirs. These logistical and technical hurdles mean that even after the Strait of Hormuz reopens, oil cannot be moved or extracted at full capacity immediately.
Which countries can restore oil production the fastest?
Saudi Arabia and the United Arab Emirates are expected to lead the recovery due to their available spare capacity. In contrast, Iraq and Iran face slower recovery times due to infrastructure issues, sanctions, and reservoir characteristics.
What percentage of global oil passes through the Strait of Hormuz?
Under normal market conditions, the Strait of Hormuz is responsible for the transit of about one-fifth (20%) of the world's total oil supply, making its status critical for global energy prices.