Iran Could Soon Be Drowning in Oil

Iran is facing a growing storage crunch as it struggles to move its oil. A U.S. naval blockade has sharply reduced exports, and with negotiations to resolve the conflict going nowhere, the country is resorting to unconventional measures to keep production going. Crude is being packed into aging tanks, makeshift storage, and even rail shipments bound for China in an effort to avoid shutting down wells, according to reporting from the Wall Street Journal.

Data from analytics firm Kpler shows a steep drop in Iran’s seaborne oil shipments—from roughly 2 million barrels per day before the conflict to about 567,000 barrels daily since the blockade took effect on April 13. The decline has already forced output reductions and raised concerns that available storage could be exhausted within the next couple of weeks, estimates cited by Bloomberg suggest a window of 12 to 22 days.

If the situation doesn’t improve, Kpler projects Iran’s oil production could be cut in half, falling to around 1.2 million barrels per day by mid-May. While the financial hit may not be immediate, analysts warn that abrupt and severe production cuts risk causing long-term harm to the country’s older oil fields, many of which already operate under low pressure.

The disruption is also affecting global markets. Limited access through the Strait of Hormuz has driven Brent crude prices back above $108 per barrel, increasing fuel costs worldwide. Iran has suggested it could stop attacks in the strait if the war ends and the blockade is lifted, while setting aside nuclear negotiations for the time being. So far, the United States has shown little interest in that proposal.

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