Photo credit: Courtesy of the US department of Defense

Since the US blockade of Iranian ports began, Iranian oil tankers, which previously accounted for about 85% of the country’s total exports, have not left port. “The blockade is working to perfection; there is no economic trade going into or out of Iran,” a US official told the Post.

As a result, Iran has been forced to store all the oil it extracts through various means, including onshore facilities and floating storage aboard vessels, particularly Very Large Crude Carriers (VLCCs), supertankers designed for long-haul transport of crude oil that typically carry around 2 million barrels.

“There’s onshore storage, and then there’s floating storage on vessels,” Joseph Webster, a senior fellow at the Atlantic Council, told the Post.

One Western intelligence source explained the wide gap, about 45 days, between the minimum and maximum estimates of Iran’s storage capacity.

Iran could run out of storage for oil, sources say
“There is a common practice of not storing oil in tankers older than 25 years to avoid degrading the quality of the oil. The unanswered question is how far Iran is willing to go in using such vessels, and that will affect how many days of storage capacity it actually has left.”

In addition, some tankers appear to be evading the blockade. The company Windward reported that sanctioned Iranian tankers, disguised as Iraqi vessels, are transporting hundreds of millions of dollars’ worth of Iranian crude.

This comes as President Donald Trump has intensified the port blockade in an effort to squeeze Tehran’s oil lifeline.

“A cluster of 10 Iran-trading, US-sanctioned tankers is now spoofing its AIS location to falsely appear at anchorages off Basra, Iraq, as the blockade continues to constrict Iranian ports,” Windward said.

However, assuming the blockade continues, storage capacity on land and at sea is expected to eventually run out. At that point, the impact will likely extend to oil production itself.

“In the future, Iran will run out of storage for all this oil,” said Eyal Hashkes, a strategic consultant and author of The Swords of Economy. “When that happens, they will have to start shutting down wells. After a well remains inactive for a long time, it often cannot simply be turned back on; it can take years of rehabilitation.”

Webster argues that in recent years, under sanctions, Iran has developed the ability to restart oil wells relatively quickly, even after periods of shutdown. “Iran has a history of restarting production after shut-ins. To a limited extent, this may damage long-term production, but they’ve proven they have the ability to bring output back online.”

It is estimated that once Iran’s storage capacity is exhausted, it could create conditions more favorable for a potential agreement between the United States and Iran. However, Webster cautioned that Iran’s tolerance for economic pressure appears to be significantly higher than that of its adversaries.

“Iran’s pain threshold seems to me quite high, frankly, higher than the coalition’s. So even if they are forced to shut in production, it will impose only limited costs on Iran, while inflicting proportionally greater damage on the coalition’s economies.”

News.Az 

By Ulviyya Salmanli