Strait of Hormuz blocked: in Iran, oil accumulates and storage capacities saturate

Iran is drowning in unsold oil due to the conflict in the region. According to experts, Tehran only has a few weeks, maybe two, before it has to shut down its facilities.

As the price of oil continues to rise and the United States imposes a blockade on Iran restricting traffic to and from Iranian ports in the Strait of Hormuz, Tehran is facing serious storage issues with its production. The process to slow down production or halt oil fields is very complicated. The result: even by reducing production, Tehran is overwhelmed with unsold oil that the country must store in makeshift reservoirs. The entire economy of the country is in limbo.

Using abandoned sites, makeshift containers, attempting rail exports to China… For Tehran, anything goes to delay the shutdown of its oil operations. “Once the designated storage, buffer storage, and pipelines themselves are full, the obligation is to halt production,” explains Patrice Geoffron, an economics professor at Paris-Dauphine, specializing in energy.

An extremely complicated process that can damage oil fields due to pressure and geology issues. Tehran is exploring makeshift solutions. “The most significant point in this regard, from the information available, has been the reuse of an old supertanker,” adds Patrice Geoffron. “It is clear that it was no longer active for transporting oil and is now a floating barge to avoid congestion.”

“This congestion can ultimately only result in a production shutdown, which would have a massive impact on the Iranian economy and likely on the sustainability of the regime.”

Patrice Geoffron, economics professor at Paris-Dauphine, specialist in energy

– franceinfo

Prior to the war, Iran was exporting an average of two million barrels per day, now it’s only 500,000. According to specialists, Tehran only has a few weeks, maybe two, before it has to shut down its facilities.