Creating a summary using artificial intelligence. Following the signing of the interim peace agreement between the United States and Iran, the Gulf states, particularly Saudi Arabia and the UAE, began resuming oil production and gradually reopening the Strait of Hormuz. The process faces challenges such as mine clearance and restarting refineries, with production expected to return to pre-war levels within months, potentially lowering energy prices and rebalancing the global market. [Article summary being generated...]

From the moment the Strait of Hormuz effectively became a hostage to Iran's war, energy officials in the region began planning the largest logistical operation the sector has ever seen: reopening a vital waterway for global oil supplies and reversing the largest production cut in the region's history.

The unprecedented nature of the shutdown has left many in the sector operating in uncertainty and without a clear timeline.

In the UAE, an official says the country spent the initial days of the conflict developing a phased mechanism for shutting down oil wells to ensure production was in the best possible position to rebound. Officials note that Saudi Arabia and the UAE have managed to maintain sufficient pressure levels in their fields, potentially allowing a return to pre-war production levels within just two weeks. Saudi supertankers have also forfeited millions of dollars in revenue since April while waiting in line to load crude from the Kingdom as soon as the Strait of Hormuz reopens.

Within hours of the signing of the interim peace agreement between the US and Iran on Wednesday, three Saudi supertankers appeared outside the Strait, among the first vessels in a surge of traffic, although the volume of observed traffic slowed on Friday.

However, other players are taking a more cautious stance, seeking further assurances regarding the mine-clearing program and arrangements for allowing ships to leave the Gulf. However, the agreement signed by US President Donald Trump and his Iranian counterpart, Masoud Pezeshkian, is supposed to signal the resumption of operations at oil wells and refineries across the region—a restart so massive that it can be detected from space, where satellites will pick up thousands of megawatts of thermal signatures from the flaring of gas in the fields.

Patrick Pouyanné, chairman and CEO of TotalEnergies SE, told the French parliament on Wednesday: “We should be able to restore normal operations in this entire market within the next six months, provided that we actually return to a period where the Strait is open.” He added, “Everyone will be watching what actually happens on the ground.”

The resumption of production and the flow of barrels through the Strait of Hormuz also opens the door to lower energy prices and reduces inflationary concerns among central banks worldwide. For Trump, this offers the added benefit of lowering fuel prices before the midterm elections in November and giving the US a chance to rebuild its critically low inventories.

For the reopening process to proceed smoothly, it must be carefully coordinated, ensuring ships are in the right positions, wells are brought back online, infrastructure is repaired, and a demining agreement is reached. The process could easily falter if not enough ship owners are willing to enter the Strait of Hormuz quickly to transport cargo, if Iran begins imposing transit fees as the interim agreement suggests, or if the Trump-led peace plan collapses and hostilities resume.

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Challenges to resuming oil production: During certain periods in the past four months, Gulf oil exports have fallen by about 15 million barrels per day, a 60% decrease compared to February levels. Benchmark crude oil prices have also exceeded $126 per barrel and have not risen further in recent months only because of record drawdowns from emergency oil reserves and a sharp drop in demand, which have helped alleviate global supply shortages.

The Iranian attacks caused an estimated $42 billion in damage to key infrastructure, including refineries and pipelines, according to the consultancy Rystad Energy. A U.S. embargo aimed at reducing Iranian oil revenues has also halted shipping traffic. Senior oil industry executives say some refineries may need months to fully resume operations.

Meanwhile, more than 100 oil tankers, laden with cargoes and hundreds of crew members, remain stranded in the Persian Gulf, according to analysts at the maritime brokerage firm EA Gibson.

Saudi and Emirati officials are confident that crude oil flows will soon be restored. However, restarting refineries, which convert crude into usable fuels, is likely to be a longer process requiring specialized equipment and complex engineering work. According to IIR Energy, a company specializing in analyzing this data, the region's six major refineries were experiencing downtime of approximately 1.4 million barrels per day, representing more than a fifth of the refined fuel exported through the Strait of Hormuz before the war.

Not all producers were equally successful in keeping their fields running at peak capacity during the conflict. Saudi Arabia and the UAE managed to divert some of their oil supplies via pipelines to Yanbu on the Red Sea and Fujairah on the Gulf of Oman, bypassing the Strait of Hormuz.

Even within individual countries, the picture is unclear. One official warned that restoring Iraq's oil fields to their previous levels will be a slow process because the prolonged shutdown has led to wells becoming clogged with substances like paraffin. Meanwhile, signs of increased Iraqi production are beginning to emerge. A senior official at the Basra Oil Company stated this week that production has risen by about 500,000 barrels per day compared to the period before the war.

See also: Iraq prepares to boost oil exports as Hormuz reopens.

A spokesman for the Iraqi Oil Ministry stated that the pace of resuming production will vary from field to field, noting that the ministry is prioritizing fields that produce associated gas or where this gas can be utilized. Regarding

the obstacles to Iraqi oil production, Fraser Mackay, head of upstream analysis at the consultancy Wood Mackenzie, which anticipates a return of 70% of pre-war production within three months and 90% within six months, points out that "restoring supplies on this scale is absolutely unprecedented. There will be positive surprises for producers, but there will also be setbacks."

Indeed, the reopening of Hormuz has been quietly underway for weeks. Each day, a handful of oil tankers—starting as a limited flow and eventually rising to as much as five million barrels per day, roughly a quarter to a third of normal pre-war traffic—have been keeping abreast of the Omani coast and exiting the 21-mile-wide waterway.