Saudi minister says it will take time for oil-producing countries to ramp up output

Saudi Finance Minister Mohammed Al-Jadaan on Friday welcomed news that Iran would reopen the Strait of Hormuz, clearing the path for oil shipments to resume, but warned the situation in the Middle East would remain very fragile until a durable de-escalation was achieved.

Certain countries would be able to restore their production capabilities quickly, but others would need more time, depending on the extent of the damage they suffered, Al-Jadaan, who chairs the International Monetary and Financial Committee (IMFC), which advises the International Monetary Fund, told reporters.

The biggest challenge was not how much production of oil and natural gas could be ramped up, but whether insurers would feel comfortable backing shipments, he said at a briefing during the IMF and World Bank spring meetings in Washington.

"The hope is that we will see a serious, serious, credible de-escalation," Al-Jadaan said. "The worry that we have, and I can tell you from a country with possibly the most experience in this field ... is convincing insurance companies to actually start insuring at a time when there is no agreement on cessation of hostilities."

Al-Jadaan noted that the current ceasefire would expire in a few days, and said he hoped it would be extended, resulting in a de-escalation. "But until that, I don't think insurance companies would respond. I don't think owners of tankers would respond. And it will take a bit of time for ... producing countries to ramp up in response."

Iran on Friday said the Strait of Hormuz was open for the remainder of a 10-day ceasefire agreement agreed between Israel and Lebanon on Thursday, while US President Donald Trump said talks could take place this weekend with Iran that could soon lead to a deal ending the Iran war.

US-Israeli strikes on Iran began on 28 February, triggering Iranian attacks on Gulf neighbors and reigniting the Israel-Hezbollah conflict in Lebanon. Thousands have been killed and the conflict effectively shut the Strait of Hormuz - through which a fifth of the world's oil and liquefied natural gas usually transits - triggering the worst oil shock in history.

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IMF Managing Director Kristalina Georgieva told the briefing that the day's news would reduce anxiety, but didn't eliminate it. IMF members agreed that the supply shock from the war posed a serious threat to the global economy, she said.

"Even if the conflict ends tomorrow, the infrastructure damage and supply disruptions will inflict a toll for some time to come. The most vulnerable countries and people will be hit the hardest," she said.

She said it was too soon to back away from the IMF's most severe forecast, which sees growth dropping to 2% in 2026, bringing the global economy to the brink of recession.

"Time is not our friend. With each passing day, risks are rising that we will end up in a more adverse scenario, pushing us into even lower growth and higher inflation," she said.

Georgieva said she expected about a dozen countries to seek new programs and some five to eight countries with existing programs to seek additional funds. Many of those hit were in Sub-Saharan Africa, she said.

IMF officials would meet with their counterparts from the World Bank next week to compare notes and work out solutions for the most vulnerable countries, Georgieva said, adding that the World Bank could offer grants in some cases, while the IMF was limited to loans.