Al Jaber says oil supply will take months to recover

• Minister: no return to full capacity until H1 2027
• Some Adnoc operations to restart fully in weeks
• Energy industry ‘dangerously under-invested’

Global oil flows will take four months to return to 80 percent of typical levels if the Middle East war ends tomorrow, and will not be back at full capacity until the first or second quarter of 2027, UAE industry minister Sultan Al Jaber said.

Damage from Iranian attacks to the facilities of state-owned Abu Dhabi National Oil Company (Adnoc), of which Al Jaber is managing director, is still being assessed, with some operations expected to resume fully within several weeks, while others will take months to repair, he said yesterday.

Al Jaber called Iran’s effective closure of the Strait of Hormuz in retaliation to US-Israeli strikes the “most severe supply disruption on record”.

More than 1 billion barrels of crude have been taken offline since the start of hostilities on February 28, a number that increases by nearly 100 million barrels each week, the minister noted during virtual remarks before the Atlantic Council in Washington.

The price of Brent crude has risen 40 percent from where it traded before the conflict, fuel prices have jumped 30 percent, those of fertilisers 50 percent and airfares are up 25 percent, Al Jaber said.

“This is not just an economic problem, in fact this sets a dangerous precedent,” he said. “Once you accept that a single country can hold the world’s most important waterway hostage, freedom of navigation as we know it is just finished.”

“If we don’t defend this principle today, we will spend the next decade defending against the consequences,” Al Jaber added.

The conflict is changing the question of energy security from one of production volumes to one of “routes, access, storage and redundancy”.

The UAE’s efforts to find alternatives to Hormuz include a second West-East pipeline to Fujairah on the Gulf of Oman, which is expected to double capacity on that export route.

Al Jaber said work on the pipeline is nearly 50 percent complete and has been sped up toward delivery next year.

An increasingly power-hungry world that needs more energy to accommodate population growth and the artificial intelligence build-out will keep demand for oil “well above 100 million barrels [per day] into the 2040s”, Al Jaber predicted.

But the oil and gas industry is “dangerously under-invested”, he said.

Global spare capacity is hovering around 3 million barrels a day, when it should be “closer to five”.

“And in just two months, the world drew down around 250 million barrels from storage,” Al Jaber said. “We have 30 to 35 days of effective cover. We need to at least double that.”

Further reading:

• Crisis is a ‘call to double down’, says Adnoc Drilling CFO
• Abu Dhabi plans construction rush after quitting Opec
• Demand for oil severely outstrips supply, IEA warns

The minister framed his country’s decision to leave the Organization of the Petroleum Exporting Countries (Opec) as a “sovereign strategic choice” that provides more flexibility to invest, produce and export.

“The world needs more of what the UAE produces, and that is the lowest-cost, lowest-carbon barrels out there,” he said.

”At the same time, we in the UAE need more energy to move at the speed of our ambition,” Al Jaber added, pointing to AI, advanced manufacturing and other new industries.

He described the UAE-US relationship as “more integrated, more ambitious and more consequential every year”.

Adnoc directly, and through subsidiaries such as overseas investment arm XRG, has already allocated more than $85 billion across 19 states.

“The UAE and the United States are not just trading partners: we are co-investors in the economy of the next century.”