Brace for a flood of oil as soon as Hormuz reopens
The oil industry doesn’t have a playbook for it. It will learn by doing.
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Before oil can restart, the first job is to get tankers past the Hormuz bottleneck into the Persian Gulf.
PHOTO: REUTERS
Javier Blas
When the day comes, the reopening of the Strait of Hormuz will be an extraordinary event: restarting about 10,000 oil wells, pumping roughly 15 per cent of the world’s production, that had been shut down for a hundred days and counting. Nothing even remotely close has been attempted – ever. The oil industry doesn’t have a playbook for it; it will learn by doing.
Unsurprisingly, the commodity market is deeply divided about how long it would take: oil bears believe it could be done in days and weeks, while the bulls talk about six to eight months, perhaps even a year. The most pessimistic say many wells won’t restart at all.
