Beyond Hormuz: The Deeper Oil Threat That Could Outlast War

While much of the world is watching oil tankers navigate the Strait of Hormuz, one petroleum geologist says the deeper energy threat may lie far below the surface — in shut-in wells that could remain a problem well after diplomats reach any deal to stop the conflict.

Art Berman, a petroleum geologist and energy consultant with more than 40 years in the oil industry, told News Outlet that millions of barrels of Persian Gulf oil production are still offline. Bringing those wells back, he cautioned, is not nearly as simple as reopening one of the world’s most important shipping lanes.

“This is potentially a kind of a world-changing event, even if we resolve the political issues,” Berman said.

“The bigger story and the more important one long term is that 8 million barrels of Persian Gulf production is currently shut in and world production is down about 10 million barrels a day,” Berman explained.

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Berman said the focus on tanker traffic risks missing the bigger supply challenge. “We can move tankers around and we can obsess about, you know, are there 4 million barrels getting through or are there 6 million or 9 million or whatever the right number is,” he added. “But eventually, those tankers have to be filled with oil.”

A White House official, speaking on background, pointed to the sharp drop in oil prices after the MOU was signed and said the Strait of Hormuz remains open, with the U.S. naval blockade fully in place.

Berman’s estimate of Persian Gulf production shut-ins closely tracks the latest figures from the International Energy Agency. In its Aug. 12, 2026, Oil Market Report, the IEA said, “Gulf oil production rose by a further 2.5 mb/d in July to 23.9 mb/d, still 8.3 mb/d below pre-war levels.”

Global oil supply remained 6.3 million bpd below year-earlier levels, according to the agency.

The U.S. Energy Information Administration offers a somewhat different estimate.

EIA assessed production shut-ins at an average 5.5 million bpd in July, while warning that continuing constraints on Hormuz transit had forced the agency to increase its forecast for shut-in production in August. EIA expects production and trade patterns to generally return to pre-conflict conditions in early 2027, but says some Gulf producers may not regain their previous output during its forecast period.

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‘Not like turning on a switch’

The distinction is important because much of the public discussion has centered on what the industry calls the midstream problem — whether tankers can safely transport oil through Hormuz — while Berman argues that the upstream problem of producing the oil itself could prove more enduring.

“The very last thing in the world I ever want to do is to shut in a well,” Berman told News Outlet.

Restarting a well requires restoring communication between equipment at the surface and reservoirs thousands of feet underground, he explained, and extended shutdowns can create complications inside the reservoir and well.

“This is not like turning on a switch for a light bulb,” Berman said. “It’s a complicated, high-risk, relatively long-term process, and we don’t know the outcome.”

Berman estimated that roughly 80% of affected wells could return close to their previous production levels, although he said that could take weeks or months. He said many of the remainder could require additional engineering work and some could ultimately produce at lower rates.

“Some of that production will never come back,” he predicted.

Other energy analysts agree that restarting Gulf production presents substantial technical challenges. But Wood Mackenzie is more optimistic than Berman about the ultimate recovery.

Its analysis projects that fields affected by the Hormuz closure could return to approximately 70% of their previous production within three months and 90% within six months, assuming a controlled restart. The final roughly 1 million bpd could take considerably longer.

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Berman also warned against assuming that a ceasefire or political agreement would immediately restore pre-war energy flows.

Shipowners, insurers and crews would first have to become confident that tankers could safely navigate the waterway, while other logistical and security issues could continue even after governments reached an agreement.

“A simple political agreement doesn’t mean the problem’s over,” Berman said.

‘A world-changing event’

Berman’s argument goes considerably further than predicting a slow oil-market recovery.

He contends that the Persian Gulf conflict represents a fundamental shock to the global energy and economic system — one whose consequences will persist even after the immediate crisis ends.

Asked about his comparison with the COVID-19 pandemic, Berman told News Outlet that the scale of oil production affected by the current crisis makes it comparable to the largest economic disruptions of recent years.

“This is not just a news cycle,” Berman said. “This is potentially a kind of a world-changing event, even if we resolve the political issues.”

Why Americans are not insulated

The United States is the world’s largest oil producer, but Berman argues that does not isolate American consumers from the disruption.

“The oil market and the refined products market is global,” he told News Outlet.

Berman noted that U.S. refineries require different grades of crude to produce the country’s mix of gasoline, diesel, jet fuel and other petroleum products, meaning domestic production alone cannot eliminate America’s exposure to international markets.

“The problem for the U.S. isn’t that we don’t have enough oil, we almost do,” Berman said. “It’s that the oil we have isn’t the right kind” for everything American refineries produce.

EIA reported July 15 that Hormuz disruptions had already pushed international buyers toward alternative sources of petroleum products, contributing to higher U.S. refinery margins, production and exports.

Whether that recovery proceeds as EIA expects or encounters the technical obstacles Berman warns about could determine how long the economic consequences of the conflict linger after the shooting stops.

For Berman, the question is no longer simply when tankers return to Hormuz. It is whether the global energy system that emerges afterward will ever operate quite the way it did before.

The White House pushed back on concerns that the disruption represents a lasting threat to U.S. energy security, pointing to record American production and blaming Iran for instability in the critical shipping corridor.

“Thanks to President Trump, the United States is now the world’s number-one producer and exporter of oil and gas. Record oil and gas production strengthens our energy independence and national security,” White House spokeswoman Taylor Rogers told News Outlet.

“The Iranian regime’s terrorist actions in the Strait of Hormuz have proven that our allies need to invest in reliable, affordable, and secure energy sources and advance new partnerships with the United States that enhance the world’s energy security,” Rogers added.

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News Outlet has reached out to the White House, U.S. Energy Information Administration and Defense Intelligence Agency for comment.