Long recovery even if war ends now: Saudi minister

• Aljadaan: ‘weeks if not months’ for flow resumption
• Restoring confidence on Hormuz would take time
• Minister calls for ‘credible’ resolution to conflict

Markets underestimate the global economic impact of the US-Israeli war with Iran and how long it will take for oil, gas and other commodities to resume flowing once hostilities end, the Saudi finance minister said.

Even if the conflict ceased today, it would take “weeks if not months” for Gulf output of energy, fertilisers and other industrial inputs to recover from damage and shut-ins, and for exports to transit again via the Strait of Hormuz, Mohammed Aljadaan said on Thursday at the IMF’s spring meetings in Washington. 

Ramping up production and getting markets, shippers and insurers confident that commercial vessels can transit the waterway without coming under missile or drone attack will take “some time”, Aljadaan said.

“And the basic logistics of scheduling tankers and bringing them back after the chaos that we have seen over the last couple of months, that will take possibly to the end of June.”

International Monetary Fund managing director Kristalina Georgieva, who spoke alongside the Saudi minister, urged authorities around the world not to panic, but to acknowledge the seriousness of the situation. 

“For a tanker that leaves [the Gulf] tomorrow to get to the Pacific Islands is 40 days,” Georgieva said. “We have a slow-moving solution in the 21st century where we got accustomed to everything moving fast.”

US President Donald Trump announced on Thursday that Israeli and Lebanese officials had agreed to a 10-day ceasefire, which adds to the two-week truce in effect between the US and Iran. Prospects for ongoing efforts to resolve the multifront Middle East war remain unclear.

Aljadaan said any eventual resolution must be “credible enough” for all other stakeholders to believe it will prevent hostilities from recurring.  

“My advice to my colleagues is: please prepare yourselves, your economies and your people that this will take longer than you expect,” he said. 

In the interim, energy importers have to contend with the huge difference between international benchmarks for crude oil futures, such as Brent contracts, and what it costs to acquire physical barrels, Aljadaan added.

“You see on a screen $90 a barrel,” he said. “Good luck if you get an oil barrel for $90. It’s $120, $130, $140, $150, $160 from the last few weeks.”

Brent futures were down around 1 percent at $98.14 a barrel in early Friday trade, while West Texas Intermediate crude futures lost 1.6 percent at $93.15.

An analyst with London-based EBC Financial Group described in a note “two oil markets” that are “telling completely different stories”, as “futures are pricing a short-lived disruption, but the physical market signals a genuine supply crisis”. 

Aljadaan remained sanguine that Saudi Arabia and other Gulf states are broadly continuing business as usual and will not allow the conflict to derail structural reforms, diversification efforts and investment plans. 

Further reading:

• Saudi construction surge defies war pressures
• Worst month for Saudi businesses since Covid-19
• Iraq claims it can raise oil output within hours

In its latest World Economic Outlook, the IMF downgraded its forecast of Saudi growth for 2026 to 3.1 percent, 1.4 percentage points below the January estimate. But it revised upward the country’s recovery next year to 4.5 percent. 

Earlier this week, International Energy Agency executive director Fatih Birol praised the kingdom’s quick pivot to its East-West pipeline to sustain oil exports amid Hormuz’s closure, and said damaged Saudi production sites are likely to be repaired faster than others in the region.

Georgieva pointed to Saudi Arabia and other Gulf states as countries that have “done a lot” in recent years to build “strong fundamentals, promote reforms and diversify their economies”.

“That is making it easier on them as a result,” she said.