The Iran war has prevented the production and delivery of about 1 billion barrels of crude oil in its first three months, equivalent to 2.5 times the volume of the US Strategic Petroleum Reserve, Rystad said in a research note on Tuesday.
The cumulative losses are on track to reach 2 billion by the end of the year under Rystad's base case scenario. This assumes a "narrow" US-Iran deal being struck in June and phased reopening of the Hormuz Strait starting in mid-July, it said.
But it could turn out worse as each passing month adds about 350 million barrels to the total unproduced oil while the longer the conflict persists, the more risk there is that some oil resources will never return to production due to technical constraints. It notes that Iraq and Kuwait face longer restart times than average.
With 11.8 million bpd "shut in" or no longer being pumped at wells in six different Gulf producer states, this is now the most severe supply disruption of the modern oil era, Rystad says.
Production across these six countries before the war was 24.2 million bpd in January and it now stands at 12.4 million bpd, the note said. Saudi Arabia has had to reduce output the most, proportionally, by 3.8 million bpd or 32% then Iraq with a 2.8 million bpd reduction and a 2 million bpd reduction in Kuwait.
These three country snake up about three quarters of the shut-in volumes.
Hormuz traffic averaged 5 to 10 vessels per day in March versus typical pre-war movement of about 120 per day while LNG-laden vessels are virtually nil.
Adnoc has fast-tracked an expansion of the Adcop pipeline to connect onshore fields to Fujairah, a project that will take its nameplate capacity to 3.3 million bpd from 1.8 million.
Iran loaded an average 1.64 million bpd in March before the US blockade of its ports began in April, Rystad said.
Exports fell to 1.34 million bpd in April and are likely to have dipped below 500,000 in May with the US military's Central Command halting 107 vessels heading to or from Iranian ports, as of May 27.
China reduced imports of Iranian crude by 500,000 in April to about 1.1 million bpd. Iran has between 150 million and 160 million barrels of oil on water supplying Chinese refiners and maintaining Iranian revenues, while those supplies last.
Even if the Hormuz Strait reopens around mid-July, upstream recovery will take time, with tanker repositioning necessary and limiting potential July recovery of shut-in volumes to 10-15%, Rystad said.
A stronger recovery would take place over August and September with supplies in the Middle East rising to 17.3 million and 20.9 million bpd respectively, it said, while 85% of lost volumes would be restored by October, the note said.