Bloomberg reported on April 27, citing commodities analytics firm Kpler, that Iran has only about 12 to 22 days of usable crude storage remaining.
Kpler said shrinking storage could push Iran to cut output by as much as 1.5 million barrels a day by mid-May. Goldman Sachs has previously assessed that Iran has already reduced crude production by up to 2.5 million barrels per day.
Iran’s crude exports have fallen sharply since a U.S. maritime blockade, Kpler said. Recent exports were about 567,000 barrels a day, down from a March average of about 1.85 million barrels a day. Crude loadings have also dropped about 70% since the blockade, it said.
Even with lower production, the fiscal hit is expected to arrive with a lag. It takes about two months for Iranian crude to reach Chinese ports, its main destination, and payments take additional time, meaning the impact of reduced revenue is expected to become more pronounced in about three to four months.
Iran is expanding stopgap measures to keep production going, The Wall Street Journal reported. With crude piling up at home, Iran has restarted disused storage tanks in poor condition and is using temporary facilities such as containers. The steps are seen as aimed at easing infrastructure strain and reducing U.S. pressure amid tensions around the Strait of Hormuz.
Sanam Vakil, director of the Middle East and North Africa program at the U.K. think tank Chatham House, said Iran is trying to avoid shutting in production and deepening revenue losses. “A production shutdown would increase pressure and encourage negotiations,” she said.
Iran is also turning to rail transport, a method typically avoided because it is less profitable and efficient. A spokesperson for the Iran Petroleum Exporters Association said Iran is pursuing a plan to ship crude to China by rail.
Erica Downs, an energy policy expert at Columbia University, said it is unclear whether small Chinese refineries will absorb higher rail costs, calling it “a measure born of desperation.”
* This article has been translated by AI.
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