After 40 days of fighting, the United States and Iran agreed to a two-week ceasefire on Wednesday morning, with talks expected to begin on Friday in the Pakistani capital Islamabad.
A key point in Iran’s 10-point proposal is to allow the resumption of shipping through the Strait of Hormuz, through which 20 percent of the world’s oil and gas is shipped during peacetime but which has been virtually closed since the beginning of the war, sending global oil and gas prices soaring.
Following the announcement, oil prices – which had remained well above $110 during most of the war – fell to $92 on Wednesday.
Prices at petrol pumps have been increased in more than 100 countries in the last six weeks. Several governments, mostly in Asia, have declared national energy emergencies and introduced strict measures to limit consumption, including work-from-home policies, shorter work weeks, fuel rationing and curfews.
Constant uncertainty and logical limits
While reopening the Strait of Hormuz provides an important release valve for energy, delays in resuming production and transportation mean the energy crisis is far from over.
For ships to continue operating, they need certainty about safety during the next two weeks of the armistice.
Even after the waterway reopens, it will take weeks for large oil tankers – now scattered thousands of miles apart – to return to the Gulf to collect the millions of barrels sitting in huge reservoirs.
With so few tankers able to load or unload and their onshore storage full, producers began shutting in wells, leading to a decline in regional oil production despite efforts to reship limited quantities via overland pipelines. Restarting wells isn’t like flipping a switch; It is expensive and technically demanding.
Economists and agriculture experts warn that the real impact on grocery bills will last into 2026 and 2027. Additionally, it will take years for the Gulf energy industry to repair facilities damaged or destroyed during the war.
How much oil was destroyed due to Iran war?
Shipping data from Kpler, a data and analytics firm that tracks commodity markets, analyzed by Al Jazeera’s open source unit shows that combined exports from Iraq, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates fell from 469 million barrels in February to 263 million barrels in March – a drop of 206 million barrels or 44 percent.
The decline was sharp but uneven across the six countries, with some countries affected far more than others depending on their port locations and pipeline choices.
Which oil producers are most affected?
Iraq’s crude oil exports have been hardest hit, falling 82 percent from 94 million barrels in February to 17 million in March.
Kuwait and Qatar lost nearly three-quarters of their crude oil shipments, with volumes falling by 75 and 70 percent respectively.
Saudi Arabia and the United Arab Emirates managed smaller proportional declines of 34 and 26 percent respectively, partly offset by floating storage and pipelines that avoid the Strait of Hormuz.
Oman was the only outlying territory, with many of its ports outside the strait. Its exports rose 16 percent to 25 to 29 million barrels, helping slightly to offset the overall shortfall.
How many oil tankers can fill 206 million barrels?
The 206 million barrels of Gulf oil lost since the start of the war will replenish about 103 very large crude carriers (VLCCs), the workhorse supertankers of the global energy trade.
VLCC is one of the largest and heaviest ships at sea and is designed to carry two million barrels of crude oil in the world’s oceans. Only Ultra Large Crude Carrier (ULCC) ships are larger, with a carrying capacity of three million barrels.
ULCCs are less common than VLCCs because their depths are at least 24 meters (80 ft), making them too deep to navigate most of the world’s waterways and global ports.
How big are the very large crude carriers?
To put this in perspective, a single VLCC spans approximately Length 330 meters (1,080 ft).Almost the same height as the Eiffel Tower in Paris.
While there are cruise ships that are technically longer, VLCCs are the largest in terms of displacement and weight carrying capacity.
VLCCs are typically 50–60 m (164–197 ft) wide and have a depth of 20–22 m (66–72 ft) when fully loaded.
How much gasoline can one barrel of oil produce?
One barrel of crude oil contains 159 liters or 42 US gallons.
Once refined, one barrel typically produces about 73 liters (19.36 gallons) of petrol or gasoline, with the remainder producing diesel, jet fuel, and other products.
To put it in more practical terms, if you drive a pick-up truck that averages 24 miles per gallon (or 10 liters per 100 km), a barrel of crude oil will take you about 730 km or 450 miles. This is about the distance from New York City to Cleveland, Ohio.
How much is 206 million barrels of oil worth?
Crude oil is classified based on thickness and sulfur content. Oil with a lower sulfur content is known as sweet crude and is more valuable because it requires less refining.
The global benchmark is known as Brent crude, which is extracted from the North Sea between the United Kingdom and Norway. West Texas Intermediate (WTI), derived from Texas, is the US benchmark.
Oil is traded as a global commodity, meaning any disruption can have an impact regardless of where a country actually buys its oil.
During most of the war, oil traded above $100 a barrel, reaching a peak of about $128 on April 2.
Before the US-Israel war over Iran began on February 28, the average price of Brent was around $65 a barrel.
The graphic below shows the value of 206 million lost export barrels at various oil prices.
