One of the Iranian regime’s most important sources of income is rapidly drying up, as the U.S. blockade on Iranian oil exports dramatically reduces the flow of crude out of the Persian Gulf while the stockpiles Tehran managed to move out in advance continue to dwindle. The amount of Iranian crude oil stored outside the Gulf has plunged from 90 million barrels to just 29 million, according to a Wall Street Journal report published Monday.

Iran is still able to supply China with oil that was already moved beyond the blockade line, but the stockpile allowing Tehran to continue those sales is steadily shrinking. Since the United States renewed the blockade in mid-July, not a single new shipment of Iranian crude has succeeded in leaving the Gulf. Iran continues loading small quantities of oil onto tankers, but those barrels remain trapped inside the Gulf and are not reaching customers.

Ship-tracking data from Kpler illustrates the scale of the blow. Iran loaded only around 255,000 barrels per day in August, a decline of roughly 85% compared with the average recorded between February and April.

Reuters reported last week, citing estimates from Kpler and Vortexa, that Iran loaded between roughly 220,000 and 255,000 barrels per day of crude oil and condensate in August. That compares with approximately 740,000 barrels per day in July and around 2 million barrels per day in March. Reuters noted that this is the first time Iran has gone through such an extended period without significant crude-oil exports through the Strait of Hormuz.

Tens of millions of barrels that have already been loaded are also unable to reach their destinations. TankerTrackers.com data cited by Reuters shows that 29 tankers are currently inside the strait carrying 36.11 million barrels of crude oil.

The U.S. blockade does not cover Iran’s entire coastline. Instead, it is concentrated in the area between the Gulf of Oman and the Arabian Sea, where U.S. Navy vessels inspect ships leaving Iranian ports and vessels approaching them.

The current situation is fundamentally different from the pressure previously imposed on Iran through sanctions alone. For years, Tehran was able to continue moving oil through its shadow fleet and various methods designed to circumvent restrictions, with China remaining its largest principal customer. Even at the height of the U.S. “maximum pressure” campaign in 2019 and 2020, Iranian oil continued passing through Hormuz every month. Since mid-July, however, that flow has nearly stopped.

For Tehran, the damage extends far beyond the energy sector. Oil revenues fund roughly one-third of Iran’s state budget and are a major source of foreign currency. According to the Wall Street Journal, inflation in Iran has already surpassed 80%, the rial has lost roughly 15% of its value, and the economy is expected to contract by 5.4% this year.

The blockade is also beginning to affect Iran’s ability to continue producing oil at its previous pace. As tankers and storage facilities fill with barrels that cannot be exported, available storage space is shrinking and Iran is being forced to reduce production. Attempts to move oil overland have so far failed to compensate for the loss of the country’s primary export route.

Reuters also noted that the collapse in exports could create another serious problem for Tehran: fewer oil sales mean less foreign currency flowing into state coffers. Kpler analyst Homayoun Falakshahi warned that the crisis could force Iran to finance part of its spending by printing money, a move that could drive inflation even higher.

(YWN World Headquarters – NYC)