‘Exploding oil?!’ The Middle East is about to find out
‘Exploding oil?!’ The Middle East is about to find out
Exploding oil The Middle East is about - The critical juncture is approaching. With the Strait of Hormuz now open, Middle Eastern nations that paused oil extraction during recent hostilities—technically referred to as “shut in”—are set to resume operations. This restart could lead to a surge in output or, as former President Donald Trump suggested, a dramatic decline, potentially resulting in underground explosions. While the latter scenario seems improbable, Trump’s bold claims often contain a sliver of truth.
The Challenge of Restarting Production
Shut-ins are not a simple matter of turning off a tap. They involve intricate engineering processes, precise physics, and careful planning over days or weeks. When wells are left inactive, subsurface pressure can shift, causing structural changes that might impair nearby reservoirs. In extreme cases, water intrusion could diminish the well’s capacity. “The worry is what happens when you turn things back on,” said Vikas Dwivedi, a global oil and gas strategist at Macquarie Group. “It’s like a box of chocolates: You never know what you’re gonna get.”
“The worry is what happens when you turn things back on. It’s like a box of chocolates: You never know what you’re gonna get.”
Extended shutdowns also pose risks to machinery. Pumps and lifting systems may corrode, while sand and debris can accumulate. Concrete casings and tubing—essential for sealing and extracting oil—might lose their structural integrity, leading to leaks or dangerous gas releases. In rare situations, explosions could occur.
Trump frequently emphasized this possibility, but his description lacked grounding in reality. Industry experts agree that significant damage, let alone an explosion, is unlikely to have happened during the conflict. “A key question is whether prolonged shut-ins could lead to permanent production losses,” explained Natasha Kaneva, head of global commodities strategy at JPMorgan. “These risks are likely overstated.”
“A key question is whether prolonged shut-ins could translate into permanent production losses. These risks are likely overstated.”
Shut-ins have occurred before, including in Iran. During the pandemic’s early stages, global demand collapsed, leaving the world with no storage space for surplus fuel. Oil prices plummeted to negative values as no one wanted to buy it. Producers worldwide halted operations without major long-term issues. Even in Iran, which faced severe economic strain, the industry managed the situation effectively.
Restarting production after a shutdown isn’t as straightforward as flipping a switch. It requires a gradual process over weeks to avoid reservoir collapse, necessitating re-drilling and costly repairs. Companies must balance underground pressure by injecting water and gas, a task complicated by the proximity of wells in the region. Coordination across borders is essential to prevent cave-ins, leaks, or severe well damage. While reduced flow is a risk, operators often maintain low rates during restarts to prevent issues, much like letting water drip in freezing weather to avoid frozen pipes.