The UAE's Habshan gas complex, hit multiple times by Iranian attacks during the regional war, will remain below full capacity until 2027, operating at just 60 percent capacity after wartime attacks and fires , according to the Financial Times. Debris from a successful missile interception on April 3 caused damage to the facility and killed an Egyptian national while injuring four others , marking one of the most severe infrastructure disruptions in the Gulf energy sector.
The Habshan complex is one of the largest gas processing facilities in the UAE and the wider Middle East and North Africa, operated by Abu Dhabi National Oil Company with a processing capacity of 6.1 billion cubic feet a day . The extended timeline for repairs underscores the lasting impact of the conflict on Gulf energy exports, even as ceasefire negotiations continue.
Can the U.S. Energy Information Administration's Revised Forecasts Keep Pace With Reality?
The U.S. government's energy forecasting arm dramatically revised its Middle East disruption estimates this week, acknowledging the crisis is far worse than previously projected. The EIA estimates some 10.5 million barrels of oil output was shut in across the Middle East in April, which will rise to a peak of 10.8 million bpd this month as Middle Eastern storage tanks hit maximum capacity , according to Reuters.
The EIA now assumes the Strait of Hormuz will be effectively closed through the end of May, moving back its earlier assumption that the closure would last through April . Brent crude oil prices will average around $106 per barrel in May and June, before declining to average around $89 a barrel in the fourth quarter of this year as Middle East production starts to recover , the agency said.
The revisions came alongside demand downgrades. Global oil demand will now increase by about 200,000 bpd this year, down from last month's forecast of 600,000 bpd of growth , the EIA reported. Market data shows WTI crude trading at $71.50 per barrel on Tuesday, up 0.6 percent, while Brent crude stood at $75.20 per barrel, up 0.5 percent.
Why Are Physical Crude Premiums Collapsing Despite the Hormuz Crisis?
In a paradox that has puzzled traders, physical crude oil prices have crashed from stratospheric levels even as the Strait of Hormuz remains largely shut. The price of physical crude has collapsed in recent weeks from premiums of over $30 per barrel above the Brent benchmark in early April, to near-parity or even at small discounts in the May buying cycle window , OilPrice.com reported.
The collapse reflects a dramatic shift in refiner behavior rather than any easing of the supply crisis. China's crude oil imports slumped by 20 percent, or by 2.4 million barrels per day, in April from a year earlier, with imports pegged at 9.25 million bpd in April 2026, the lowest level since July 2022 , according to official data cited by OilPrice.com.
Analysts warn this reprieve could be too short-lived, and physical prices could begin soaring again very soon as the peak refinery run season approaches and the buffers in the market are being exhausted amid a lack of resolution to the Hormuz blockage . The temporary relief masks a deeper structural problem: refiners are drawing down inventories and cutting run rates rather than paying elevated prices, a strategy that cannot continue indefinitely.
Will a Federal Gas Tax Holiday Provide Real Relief?
President Trump endorsed suspending the federal gasoline tax on Monday as retail prices climbed past politically dangerous levels. "We're going to take off the gas tax for a period of time, and when gas goes down, we'll let it phase back in," Trump told CBS News , according to Axios.
Gas prices in the U.S. currently sit at about $4.52 per gallon, according to AAA's national average, approaching the highest recorded average price of $5.02 in June 2022 , CNBC reported. A gas tax holiday is a temporary suspension of the federal gas tax, currently set at 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel, which provides more than $23 billion per year in revenue for federal highway and public transit programs .
But experts are skeptical about the actual relief drivers would see. If the federal levy is suspended, gas prices will fall an average of 13.2 cents a gallon, with a household filling a 15-gallon tank once a week between June 1 and October 1 saving a total of about $35, according to Penn Wharton analysis, with faculty director Kent Smetters noting "the actual benefit to consumers is going to be pretty small" .
