Oil markets reversed quickly after the US‑Israeli coalition announced a 2‑week ceasefire with Iran, which said it would conditionally reopen the Strait of Hormuz. The conflict began on 28 February with US‑Israeli airstrikes targeting Iran’s political leadership and military assets, which were met by widespread Iranian attacks on military targets and civilian infrastructure across the Middle East.
West Texas Intermediate crude prices, which topped $115/bbl on 7 April, slid below $93/bbl in early trading on 8 April. The European benchmark of Brent crude rose above $111/bbl on 7 April before retreating below $95/bbl by the next trading session.
Wood Mackenzie said in a research note following the ceasefire announcement that there remains 11 million B/D of crude production shut in across the region and that it will come back online only after export capacity can be normalized.
The global energy consultancy said the security of vessels transiting the Strait of Hormuz during and beyond the 2‑week ceasefire would be critical to restoring exports. Other key factors include the availability of insurance coverage for transiting vessels and sufficient inbound tankers to lift crude from the region.
Beyond these constraints, Wood Mackenzie warned that tankers could face the risk of entering the Gulf region only to become stranded should hostilities between the US‑Israeli coalition and Iran resume.
The UK‑based consultancy added that higher export capacity would free up storage and allow production and refining operations to pick up pace. Wood Mackenzie said Saudi Arabia and the UAE have about a month of storage capacity, compared with less than 2 weeks in Iraq and Kuwait.
"The initial recovery from major fields will be more than sufficient to meet the ramp-up of export volumes. Shipping logistics will remain the constraint on upstream recovery for several weeks," Fraser McKay, head of upstream analysis at Wood Mackenzie, said in the research note.
He added that unwinding export bottlenecks would still leave challenges in restoring output from many fields to prewar levels, with the scale of disruption varying by country.
Iraq could take up to 9 months to fully restore production due to reservoir management issues and resource constraints, while countries that suffered limited damage to oil and gas infrastructure are expected to ramp up more quickly.
"There are a couple of silver linings of these shut ins. The first is, this is the largest and longest buildup test—though not how they would typically be undertaken—in history, so reservoir engineers will have more data to incorporate into optimization plans,” McKay said. “The second is reservoir pressures tend to rebalance with time, and so pressure around producing wells will have increased, helping the deliverability of these wells during their recovery."
Wood Mackenzie listed several technical factors that could decide production restoration including the maturity and size of each field, the reservoir bubblepoint, and the risk of drawing down pressure too rapidly, which may lead to water or gas breakthroughs.
‘Panic Premium’ Gone, Risk Remains
Rystad Energy said the removal of a “panic premium” has eased pressure in global upstream markets, but that a risk premium remains, which is keeping prices above prewar levels.
The Oslo‑based consultancy said refiners may look to use the ceasefire to take advantage of lower prices but warned that if buyers delay in anticipation of further declines, supply tightness could linger despite the pause in fighting.
Janiv Shah, vice president of commodity markets and oil for Rystad, also said the market is aware that a full reopening of the Strait of Hormuz does not appear to be on the table as of yet. Under the current ceasefire, tankers and other vessels must still coordinate safe passage with Iran’s armed forces.
“It’s also been rumored that both Iran and Oman are permitted to charge fees under the 2-week ceasefire. This is the toll booth that traders had already begun to factor in: selective access, fee-based transit, Iran retaining control over who moves and who does not—but now with a diplomatic wrapper around it. Tanker owners, insurers, and crews need evidence that risk has actually reduced, not just paused,” he said.
LNG Supplies Also Need Time
Wood Mackenzie said in its research note that “little has fundamentally changed” in the Middle East liquefied natural gas (LNG) market, which is dominated by Qatar. In the short term, the consultancy said 14 LNG vessels currently loaded in the Gulf may soon be able to exit, though regional LNG infrastructure remains shut in.
Satellite imagery shows heat signatures at two LNG trains in Qatar, suggesting they could be brought back online quickly, Wood Mackenzie said. However, it remains unclear whether QatarEnergy will be willing to resume operations given the short duration of the current ceasefire agreement.
The consultancy added that even if QatarEnergy began restarting its massive Ras Laffan LNG complex in early May, it would take until the end of August for all 12 trains at the site to return to full capacity.