Analyst: Middle East Well Restart Faces Technical Challenges, Low Risk of Large-Scale Permanent Damage

BlockBeats News, June 24th, as the Hormuz Strait resumes navigation, some oil wells in Iran, Saudi Arabia, the UAE, Iraq, and other countries that were shut down during the conflict are gradually preparing to resume production. The market is concerned about whether the long-term shut-in wells can smoothly restore their production capacity and whether there will be permanent damage.

Analysts pointed out that both the shutdown and restart of oil wells involve complex engineering operations. Long-term well shut-ins may lead to underground pressure changes, equipment corrosion, and production decline. However, the industry has mature experience in dealing with this. Vikas Dwivedi, Global Oil and Gas Strategist at Macquarie Group, stated that there is still uncertainty about the actual performance after the oil well restart.

In response to U.S. President Trump's previous warning that shutdowns could cause oil fields to "explode" and suffer permanent damage, Natasha Kaneva, Global Head of Commodity Strategy at JPMorgan, said that the related risks are likely overstated. Historically, whether during the massive well shutdowns in 2020 during the pandemic or OPEC production cuts, Middle Eastern oil-producing countries have not experienced significant long-term production capacity losses.

Analysts believe that although the resumption process requires gradual restoration of underground pressure balance through methods such as water and gas injection, and coordination of simultaneous operations in multiple oil fields in the region, the likelihood of widespread infrastructure destruction or permanent production capacity loss is low.