Iran runs out of oil storage as US blockade of Strait of Hormuz holds

Iran is running out of crude oil storage capacity as the US blockade of the Strait of Hormuz continues to prevent tanker exits, Tavria reported on April 28, citing vessel tracking firm Kpler.

Crude is now being loaded directly onto vessels held in ports with production in the South Pars and Bushehr reaching their limits, according to data released.

Accordingly, Iranian oil production could fall to 1.2mn-1.3mn barrels per day, US media reports cited by the publication said. The disruption is feeding into higher global oil prices.

Storage tanks at Kharg Island, Iran's main crude export terminal, are close to full. The country produces over 3mn b/d, with less than half consumed domestically.

The US Navy has prevented at least 38 Iranian vessels, including tankers, from leaving the Strait since the start of the blockade, according to satellite monitoring service Tanker Trackers as of April 27. An estimated 13mn-14mn barrels worth around $1.05bn at $107 per barrel Brent have been forced back into storage.

Kharg Island's pre-blockade storage capacity was around 13mn barrels. Returned cargoes have now exceeded that level. Iran's tanker fleet is full and effectively blocked inside the Strait. Onshore storage is at its limit.

Iran has brought the decommissioned supertanker Nasha to Kharg Island for use as temporary storage. The arrangement provides around 48 hours of relief, sources said.

Tanker movements through the Strait of Hormuz, which normally handles around 20% of global oil supplies, have collapsed since the outbreak of the US-Iran war on February 28. Only four vessels transited the waterway on April 26, Tasnim reported.