Once again I am indebted to Karl W. Miller, whose analysis of the energy crisis unleashed by the war with Iran has become essential reading for me. Karl has a habit of seeing around corners. He anticipated the Houthi push in southern Yemen back in July, well before it made headlines, and his recent work on the global diesel shortage and the Gulf’s “double hit” has shaped much of what I have written here. His latest forward outlook, “The Gulf Restart Trap,” dated September 28, may be his most important yet. What follows is my summary of his findings.
The world is waiting for the moment the Strait of Hormuz reopens and the Gulf’s oil begins to flow again. Karl argues that this moment will be widely misread. The first tanker to load, or the first refinery unit to restart, will not mark the end of the crisis. The Gulf states are trying to rebuild their energy systems in an active conflict zone. Major reconstruction will take years, and any new attack can destroy completed work, close export routes and force contractors to leave before permanent repairs are finished. Miller’s conclusion is blunt: the world must plan for a prolonged energy supply crisis. For the most severely damaged facilities, he estimates the repair cycle could run as long as five years, and longer still if renewed attacks interrupt the work.
The problem, he stresses, is not money. The Gulf states have capital. What they cannot buy on demand are replacement machinery, specialist crews, secure transport and stable operating conditions.
The missing flow
Miller measures the exposure against a rounded reference of about 20 million barrels a day that normally passes through Hormuz: roughly 15 million b/d of crude and condensate and 5 million b/d of refined products, including Iraq’s exports. His provisional planning case has 8.5 million b/d flowing, leaving 11.5 million b/d, or 57.5%, interrupted. A stress case with 6.5 million b/d flowing leaves 13.5 million b/d, or 67.5%, interrupted. He is careful to say these are planning scenarios, not measured current totals, and that neither gap is automatically the net global deficit once rerouting, inventories and reduced demand are counted. But neither case resembles a marginal disruption.
In his allocation of the 8.5 million b/d case, Saudi Arabia accounts for about 4.4 million b/d, Iraq 1.7 million, Kuwait and the UAE about 1 million each, and Qatar only 0.2 million. Oman sits outside the strait, and Saudi Red Sea exports and the UAE’s Fujairah bypass are not counted.
Crude is recovering faster than fuel
The most important distinction in the report is between crude and finished products. A rebound in crude exports does not mean usable fuel is returning. Hormuz product exports excluding LPG were reported at about 1 million b/d on September 11, against about 4 million before the war, a gap of roughly 75%. Across the wider Gulf, product exports including LPG fell by nearly 60% in August. Net exports of diesel and gasoil in August were just 390,000 b/d, a little more than a quarter of their prewar level. Whether a crude cargo becomes diesel or jet fuel where it is needed depends on refinery condition, crude compatibility, product specifications and delivery routes.
There is one notable exception to the picture of shut-down refineries. Oman’s Duqm refinery reported running around 255,000 b/d during 2026, producing about 215,000 b/d of diesel, jet fuel and naphtha in the first half, most of which is likely exported.
How the oil actually gets out
Miller describes the shuttle system now moving Gulf crude. Tankers load inside the Gulf, make the exposed passage through Hormuz, and transfer their cargo to ocean-going ships in the Gulf of Oman. Large ships are doing much of this work: in one week in late September, 17 of 19 outbound crude tankers were supertankers carrying roughly 2 million barrels each.
His warning is about counting. A 2-million-barrel cargo recorded at loading, again at the strait and again at the offshore transfer is still 2 million barrels, not 6 million. And the system is slow. A 2-million-barrel shuttle completing a full cycle in 20 days supplies just 100,000 b/d, so moving 1 million b/d takes ten such ships working perfectly, plus the onward fleet. A 30-day cycle requires fifteen.
Saudi Arabia must recover two coastlines
Saudi Arabia is central to the recovery, and it faces threats on both sides of the peninsula. The report opens with a satellite image, dated September 13, of damage to the East-West Pipeline’s pumping station at Al-Mesabaah. Yanbu loadings on the Red Sea reportedly resumed on September 27, with pipeline flow around 3.5 million b/d, part of which feeds domestic refineries. In the southwest, Ansar Allah’s campaign against energy infrastructure and threats to Red Sea shipping mean Saudi operators must budget for repeated interruption at Jazan and along the maritime route. Miller cautions against blaming every Saudi incident on the Houthis. The real test is whether attacks from different directions could cut the same export chain at the same time.
Why repairs take years
The report lays out planning ranges for repair after authorization:
- Local piping and instruments: weeks to three months
- Tanks and fire systems: 3-18 months
- Power and control systems: 6-24 months
- Major process machinery: 12-36 months
- Severe integrated reconstruction: 24-60 months
In other words, restoring the most heavily damaged systems could take up to five years. These ranges don’t add up; the slowest indispensable system sets the date. An intact refinery can’t run without reliable power, hydrogen, water, controls, tankage and export access. One custom-built machine can keep an entire facility offline while everything else is ready.
Miller distinguishes three dates that are routinely confused: first output, when a restricted configuration can produce safely; dependable throughput, when it sustains its promised rate; and full restoration, when permanent repairs, backup capacity and spare parts are in place. These can be years apart.
Qatar provides hard evidence. Its latest outlook puts repairs to two damaged LNG trains at about three years, with the damaged gas-to-liquids train targeted for the first quarter of 2027. Undamaged LNG trains could resume within weeks of secure reopening.
Delay consumes capital
The longer repairs are exposed to inflation, remobilization and conflict, the more they cost. In Miller’s illustrative model, $1 billion of direct repair work stretched over five years costs $1.65 billion with stable access, $2.39 billion under constrained conditions and $3.65 billion under persistent conflict. Money committed late may buy the same physical repair at a much higher price without recovering the lost operating time.
A region competing with itself
Saudi Arabia, Qatar, the UAE, Kuwait, Bahrain and Oman are all drawing on the same global repair market: turbine and compressor factory slots, fabrication yards, specialist contractors, heavy-lift equipment and commissioning teams. A plan that assumes the same factory slot for several countries isn’t executable. Recovery will be staggered. Oman and the UAE can offer alternative ports, but sending every reconstruction cargo to the same few hubs just moves the bottleneck.
How the crisis spreads
The effects reach the rest of the world through delivered fuel, not headline production. Replacing a crude cargo does not replace a damaged diesel unit. Jet fuel must meet aviation specifications and pass through qualified airport supply systems. Longer voyages shrink effective shipping capacity: a fleet that takes twice as long per round trip delivers about half as much. Damaged LNG trains will keep gas and power markets tight after oil routes improve. And equipment diverted to repairs delays the new projects the market was counting on for relief.
The timeline
Miller treats five years as the planning horizon for severe damage. A 36-60-month program authorized in late 2026 points to completion between late 2029 and late 2031, and any attack that damages critical equipment moves the date again. Miller urges starting now: engineering, specifications, factory reservations and logistics planning can proceed before security is ideal, and waiting for a political settlement means losing the earliest manufacturing slots.
Miller’s message is that recovery must be demonstrated, not declared. It arrives when supply is dependable, temporary workarounds are gone and the system can survive another failure, not when the first tanker loads. With a repair cycle that could stretch to five years, that day is a long way off. Until then, the world is relying on a partially repaired energy system with less spare capacity and a more expensive route for every barrel of fuel it delivers.
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My third appearance with Jasim Al-Azzawi:
The Z-man and I discuss on Transition Protocol the latest developments surrounding Iran and the Gulf Arabs:
Nima wanted to know if the Houthis hit the Saudis with a new strike:
Mario and I spent some time discussing the Dubai Air flight fight:
Sulaiman wanted wto know if the fight on the Dubai flight was part of a foiled Iranian plot:
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The Gulf Restart Trap: Why Reopening Hormuz Won’t End the Energy Crisis
Aggregated summary from an independent source. Read the original at Sonar21.