Iran could run out of storage capacity for the oil it is producing within 15 to 60 days, two Western intelligence sources have told The Jerusalem Post.
Once its storage capacity is exhausted, Iran will be forced to make significant decisions, which could cause substantial economic damage that might take a long time to repair, they said.
Since the US blockade of Iranian ports began, Iranian oil tankers have not left port. They previously accounted for about 85% of the country’s total exports.
“The blockade is working to perfection,” a US official told the Post. “There is no economic trade going into or out of Iran.”
As a result, Iran has been forced to store all the oil it extracts in various ways, the official said, adding that this includes onshore storage and floating storage aboard vessels, particularly Very Large Crude Carriers. VLCCs are supertankers designed for longer transport that typically carry about two million barrels of crude oil.
“There’s onshore storage, and then there’s floating storage on vessels,” Joseph Webster, a senior fellow at the Atlantic Council, told the Post.
An oil tanker loads gas in Assaluyeh seaport at the Persian Gulf, 1,400 km (870 miles) south of Tehran, Iran May 27, 2006. (credit: MORTEZA NIKOUBAZI/ REUTERS)
Iran could run out of storage for oil, sources say
A Western intelligence source said there is a large gap, about 45 days, between the minimum and maximum estimates of Iran’s storage capacity.
“There is a common practice of not storing oil in tankers older than 25 years to avoid degrading the quality of the oil,” the source said. “The unanswered question is how far Iran is willing to go in using such vessels, and that will affect how many days of storage capacity it actually has left.”
In addition, some tankers appear to be evading the blockade. Sanctioned Iranian tankers, disguised as Iraqi vessels, are transporting hundreds of millions of dollars’ worth of Iranian crude, the Windward company reported.
This comes as US President Donald Trump has intensified the port blockade in an effort to squeeze Tehran’s oil lifeline.
“A cluster of 10 Iran-trading, US-sanctioned tankers is now spoofing its AIS location to falsely appear at anchorages off Basra, Iraq, as the blockade continues to constrict Iranian ports,” Windward said.
Assuming the blockade continues, however, storage capacity is expected to eventually run out both on land and at sea. At that point, the impact will likely extend to oil production itself.
“In the future, Iran will run out of storage for all this oil,” said Eyal Hashkes, a strategic consultant and author of The Swords of Economy. “When that happens, they will have to start shutting down wells. After a well remains inactive for a long time, it often cannot simply be turned back on; it can take years of rehabilitation.”
Webster said Iran has developed the ability to restart oil wells relatively quickly, even after periods of shutdown, in recent years and under sanctions.
“Iran has a history of restarting production after shut-ins,” he said. “To a limited extent, this may damage long-term production, but they’ve proven they have the ability to bring output back online.”
It is estimated that once Iran’s storage capacity is exhausted, it could create conditions more favorable for a potential agreement between the US and Iran.
Nevertheless, Webster cautioned that Iran’s tolerance for economic pressure appears to be significantly higher than that of its adversaries.
“Iran’s pain threshold seems to me quite high, frankly, higher than the coalition’s,” he said. “So, even if they are forced to shut in production, it will impose only limited costs on Iran, while inflicting proportionally greater damage on the coalition’s economies.”•
