Iran’s oil sector is at a critical juncture, with storage capacity almost exhausted. According to Bloomberg, Tehran has only 12 to 22 days of oil reserves left, after which there will be no place to store it.
The main reason for this crisis is the US naval blockade, which has reduced Iranian crude exports by about 70 percent. Cargo transportation through the Strait of Hormuz has virtually stopped, and tankers are unable to reach the open sea, creating a huge surplus of crude oil within the country.
The current situation may force Tehran to reduce production volumes sharply. According to experts, if the blockade is not eased, Iran will have to reduce oil production by another 1.5 million barrels per day by mid-May, in addition to the significant reductions already made.
This is a serious blow to energy infrastructure, as a prolonged shutdown of wells could lead to technical damage to the fields and subsequent recovery difficulties.
Despite these serious supply chain disruptions, Iran’s economy has yet to feel the immediate financial hit. The peculiarities of oil sales give the country some time, as previously delivered batches take weeks to reach buyers, and payments are usually made with a delay.
This factor gives Tehran a few months of “breathing space” before the supply crisis is fully reflected in state budget revenues.
