Even If the Strait of Hormuz Opens, the Damage to the Persian Gulf Energy Infrastructure is Enormous

I remain skeptical that the US and Iran will soon reach an agreement regarding the Strait of Hormuz. The US wants it open to all ships and strongly opposes Iran charging any kind of fee or toll for ships entering or leaving the Persian Gulf. Iran’s position is unchanged… It is going to collect a fee from every ship entering the Persian Gulf and will not allow Israeli or US ships to enter.

However, let’s assume that an agreement is reached on Friday and that oil and LNG tankers are allowed to exit the Gulf via the Strait of Hormuz. Even if a deal is struck, it will be months, possibly years, before the Gulf arabs return to normal because of the damage to the equipment that pumps and stores oil.

The manufacturers and the people that do the warranty work, as well as the repair work on the oil and gas platforms, power plants pipelines, compression stations, are primarily US contractors. The personnel doing maintenance and repair of the oil and LNG infrastructure are 100% tied to the US military… It is a symbiotic relationship.

Many of the warehouses where equipment and parts for repairing oil terminals and pipelines are stored also have been destroyed. Second, among the warehouse that are still intact there are limited amounts of spare parts. Third, the trained maintenance personnel that worked on the oil and gas platforms and power plant pipelines have, along with the US military, vacated many of these facilities. The lack of spare parts and the evacuation of US contractors will create additional delays in trying to return the oil and gas platforms to normal operation.

Even if everything opened up today and traffic was flowing through the Strait of Hormuz, the repair and maintenance work requited to get the systems functioning again is going to be delayed by weeks and, quite possibly, years. Some of the infrastructure, such as Qatars LNG facility ast Ras Laffen, will take at least three years to rebuild and return to full operations.

Here’s the country breakdown of the damage incurred so far:

Apart from the physical damage inflicted on the oil and gas infrastructure, there is significant harm to the global economy… The loss of 25% of the world oil and gas supply, along with 35% of the supply of sulfur and urea and 44% of helium, has caused major economic disruptions around the globe. The loss of helium, for example, which is essential to produce computer chips has caused a major spike in the price of computer chips.

Karl Miller, who provided the information for this article, summarizes the situation:

The Strait can reopen in a day. The repair ecosystem cannot. The GCC states and companies that control compatible spares, complete records, qualified people, fabrication capacity, OEM factory slots, secure logistics and allocation authority will recover. The others will remain impaired long after the conflict disappears from the headlines.

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I discussed the US weapons shortage with Ed DeMarche, editor of the Trends Journal :

Back with Pyotr Kurzin, who correctly believes that Trump’s attack on Iran is the biggest error in US history:

Nima and I had some fun with Ghalibaf’s trolling of Donald Trump:

Another lively discussion with Mario… A major focus of our conversation was Iran’s reported decision to charge a 5% toll for ships entering the Persian Gulf:

Here is my latest Counter Currents . I do a dandy rant on Russia’s failure to pursue a sound information warfare strategy:

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