Iran has about one month of unused oil storage left, according to a Bloomberg report released Tuesday. The country is running out of space to store crude oil as a US naval blockade cuts exports.
Energy tracking firm Kpler estimates Iran has between 12 and 22 days of storage capacity remaining. The firm said Iran’s national oil company currently holds about 41 million barrels of unfilled storage space. That equals roughly 22 days of oil output.
The blockade has driven Iranian exports down by about 70 percent. In March, Iran produced around 3.2 million barrels per day. But daily exports have fallen from 1.85 million barrels in March to 567,000 barrels. The drop has forced oil to pile up in storage tanks with no way to ship it out.
Kpler estimates Iran could be forced to cut production by another 1.5 million barrels a day by mid-May if the blockade continues. That would bring output down to between 1.2 and 1.3 million barrels per day.
Iran has begun taking emergency measures. Satellite images show several very large crude carriers anchored near Kharg Island, which handles about 90 percent of Iran’s crude exports. The images, reported by Bloomberg, suggest Iran is using idle tankers as floating storage. The 30-year-old tanker Nasha, unused for years, has been redeployed to hold excess crude at sea. Analysts at TankerTrackers.com say Iran has 18 empty supertankers it could also use as floating storage.
US authorities have seized two tankers carrying Iranian oil. The Pentagon estimates 31 tankers holding about 53 million barrels of Iranian crude are stuck in the Gulf, worth around $4.8 billion.
Experts warn that running out of storage space could cause permanent damage to Iranian oil fields. “If the Iranians have to shut down oil and gas production due to a lack of storage capacity, there will be permanent damage to the productivity of the oil fields,” said Derek Reisfield, co-founder of Marketwatch.
Other estimates vary. Energy analytics firm Vortexa says Iran has access to between 65 million and 75 million barrels of floating storage capacity. That would provide a buffer of roughly seven weeks. But that space is largely emergency capacity.
Iran’s oil revenue has taken a severe blow. A senior US official said Iran will have to start capping wells when storage runs out, which would cause permanent production problems. The official did not provide a specific timeline.