Iran on the Brink: Oil Storage Facilities are Full, Production at Risk 0 12

According to an analysis by Kpler, Iran is rapidly exhausting its available oil storage capacity. This situation threatens the country, which once held the second position in oil production within OPEC, with even more significant production cuts.

The Kpler report states that the unused oil storage facilities in the Islamic Republic will last only 12–22 days. This significantly increases the likelihood that by mid-May, Iran will be forced to cut oil production by another 1.5 million barrels per day.

Iran has already reduced production by 2.5 million barrels per day, as reported by Goldman Sachs last week. Similar measures have been taken by neighboring countries such as Saudi Arabia, Iraq, Kuwait, and the UAE since the onset of the war in the Persian Gulf.

Despite such grim forecasts regarding oil production, Iran's leadership is likely to feel financial difficulties in full only after several months, predicts Kpler.

Iranian oil exports have significantly decreased since early April when the U.S. president ordered a maritime blockade of Iranian ports. Vessel movement through the Strait of Hormuz remains minimal, and current Iranian supplies to the global market are about 567,000 barrels per day, according to Kpler.

In comparison, in March, exports from the country were estimated at an average of approximately 1.85 million barrels per day. Typically, Iranian oil reaches some Chinese ports, which are the main destination, in about two months.

Then buyers have another two months to complete payments, as noted by Kpler. Thus, the blockade by the U.S. Navy will not have an immediate impact on Iran's revenues, delaying the blow to them by 3–4 months.

Kpler also states that it has not recorded any successful attempts to circumvent the American maritime blockade in the Strait of Hormuz. Shipments of Iranian oil to tankers have decreased by about 70% since its implementation.