According to a report from Rystad Energy, the Middle East conflict could pose one massive headache for the region: repair costs as much as USD 58 billion, in relation to the damages received by the energy-linked infrastructure. Gulf-based oil and gas facilities alone will account for up to USD 50 billion.
The latest estimate from the independent research and intelligence company marks a steep increase from its initial USD 25 billion projection, reflecting a broader scope of damage as ceasefire talks continue between the United States and Iran.
“Repair work does not create new capacity. It redirects existing capacity, and that redirection will be felt in project delays and into inflation far beyond the Middle East. The $58 billion bill is the headline, but the knock-on effects on energy investment timelines globally may prove just as significant,” Rystad senior analyst Karan Satwani told Reuters.
Rystad sees total repair spending likely to average around USD 46 billion, with downstream refining and petrochemical assets accounting for the largest share due to their complexity and extent of damage. Industrial, power, and desalination assets may add a further USD 3 billion to USD 8 billion in costs.
“Recovery timelines are starting to diverge between assets and countries, showcasing differences in domestic execution capabilities and access to supply chains. Iran faces the most widespread damage, with repair costs potentially reaching USD 19 billion, affecting gas processing, refining and export infrastructure. In contrast, Qatar’s impact is more concentrated but technically complex, particularly at its Ras Laffan industrial hub, where repair work may overlap with ongoing LNG expansion projects,” Rystad said.
While engineering and construction will account for the largest share of spending, delays in procuring critical equipment will likely determine recovery timelines. The biggest challenge, in Rystad’s opinion, will be procuring equipment and workers.
Rystad’s estimate also coincides with the assessment of Fatih Birol, the head of the International Energy Agency (IEA), who believes that it will take about two years to recover the Middle East’s lost energy output. In an interview with German newspaper Neue Zürcher Zeitung, the official said, “That will vary from country to country. In Iraq, for example, it will take much longer than in Saudi Arabia. However, we estimate it will take approximately two years overall to reach pre-war levels again.”
Birol has further warned the energy players, along with the broader global economy, against underestimating the consequences of a prolonged closure of the Strait of Hormuz.
“Shipments of oil and gas that were already en route to their destinations before the war in Iran began have now arrived, mitigating the impact of shortages. But no new tankers were loaded in March. There were no new deliveries of oil, gas or fuels to Asian markets. This gap is now becoming apparent. If the Strait of Hormuz is not reopened, we must prepare for significantly higher energy price,” the IEA boss remarked.