As the war with the United States drags on and a US naval blockade prevents most of its oil from leaving the country, Iran is running out of places to store its crude.Faced with mounting unsold oil, Iranian authorities have begun using derelict storage tanks, improvised containers, and even rail shipments to China in a desperate effort to avoid a complete production shutdown.
According to commodity analytics firm Kpler, Iranian crude loadings have plummeted from an average of 2.1 million barrels per day before the blockade to just 567,000 barrels per day since April 13. Before the war began in late February, Iran was exporting around 2 million barrels daily, said a WSJ report.
With tankers unable to load at Iranian ports, the country’s onshore oil inventories have swelled by 4.6 million barrels to roughly 49 million barrels. While Iran has a theoretical storage capacity of 86–95 million barrels, much of that space is unusable due to safety concerns, poor condition of tanks, and logistical limitations.
Iran has started reviving old, previously abandoned storage sites — sometimes referred to as “junk storage” — in southern oil hubs such as Asaluyeh and Ahvaz. Some of these tanks had been out of service for years due to their dilapidated condition.
The country is also using empty tankers anchored offshore for floating storage and attempting to ship oil by rail to China via routes connecting Tehran to cities such as Yiwu and Xi’an. However, rail transport is far more expensive and slower than traditional tanker shipments, making it an impractical long-term solution, especially for China’s cost-sensitive “teapot” refineries that usually buy discounted Iranian crude.
Analysts say Iran is engaged in a high-stakes race: whether its oil infrastructure will collapse under the weight of unsold crude before global consumers or the Trump administration feel enough economic pain to push for a deal.Shutting down production suddenly carries serious risks. Many of Iran’s oil fields are old and have low reservoir pressure. Forced stoppages can cause long-term damage to wells and reservoirs, potentially leading to permanent loss of production capacity.Sanam Vakil of Chatham House noted that Iran is trying to buy time. “The shutdown will add pressure and motivate the negotiations,” she said.
The first round of US-Iran talks collapsed earlier this month. Iran has reportedly offered to stop its attacks in the Strait of Hormuz in exchange for a full end to the war and lifting of the US blockade, while postponing nuclear talks for later. President Trump discussed the proposal with his national security team on Monday, but no breakthrough has been reported.
The mutual blockades — Iran restricting traffic through the Strait of Hormuz and the US blockading Iranian ports — have driven up global oil prices. Brent crude rose nearly 3% on Monday to $108.23 per barrel. While prices have eased from their peak earlier in the conflict, they remain significantly higher than pre-war levels, increasing costs for gasoline, diesel, and jet fuel worldwide.Iranian officials have warned they will retaliate if the blockade causes damage to their oil wells. Meanwhile, President Trump has predicted that Iran’s oil infrastructure will reach a breaking point within days.For now, Iran continues its scramble to store every possible barrel, using outdated tanks and creative logistics in hopes of outlasting the pressure from Washington.The situation remains fluid, with both sides betting that the other will blink first in what has become an economically painful war of attrition.
Working as Copy Editor at the Business Desk of Times Now Digital. Dedicated towards crafting interesting financial stories. Previously covered financi...View More
Source: India Latest News, Breaking News Today, Top News Headlines | Times Now
