Iran is rapidly running out of oil storage after a US naval blockade sharply cut its crude exports via Hormuz. Experts say Iran may have only 12-22 days of spare capacity left. If storage fills up, Tehran could be forced to cut production even further, possibly shutting wells. Crisis is already lifting global oil prices and could have major effects
Iran's oil industry is facing one of its biggest challenges in years. A US naval blockade near the Strait of Hormuz has sharply reduced Iran's ability to export crude oil. As a result, millions of barrels are piling up inside the country. Storage tanks are filling fast. Oil tankers are being used as floating storage. Even old ships are being brought back into service.
Experts now warn that Iran could soon run out of room to store its oil. If that happens, Tehran may have no choice but to cut production even more, or even shut some oil wells entirely.
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Why Iran is facing this crisis
The problem began after the United States tightened pressure on Iran earlier this month. On April 13, Washington imposed a naval blockade targeting Iranian ports and oil tankers operating near the Strait of Hormuz.
This waterway is one of the world's most important shipping routes. A large share of global oil passes through it every day.
Before the blockade, Iran was exporting oil without major disruption. But tanker traffic has now slowed dramatically.
That has created a serious bottleneck.
Exports have collapsed
The numbers show just how severe the situation has become. According to shipping data firm Kpler, Iran exported about 1.85 million barrels per day in March.
Between April 14 and April 23, that figure dropped to just 567,000 barrels per day. That is a fall of almost 70 percent.
Even more striking, Kpler says it has not seen any Iranian tanker successfully bypass the blockade.
Only a handful of cargoes have left Iranian ports since the restrictions were imposed.
Storage space is disappearing fast
Iran is still pumping oil from its fields, even though exports have fallen sharply. That oil has to go somewhere.
Much of it is now being stored on land or loaded onto tankers waiting offshore. Kpler estimates Iran has only 12 to 22 days of usable storage capacity left.
Its onshore crude stockpiles have already risen by about 4.6 million barrels. They now stand at nearly 49 million barrels.
Total capacity is estimated at around 86 million barrels, though not all of that can be used safely or easily.
Why full storage is dangerous
Oil producers cannot simply keep pumping forever. Once storage tanks are full, production must slow down. Operators usually cut output before reaching maximum capacity. They need spare room for safety and smooth operations.
If Iran waits too long, it could face serious technical problems.
In the worst case, some oil wells may need to be shut. Restarting them later can be costly and complicated. Sometimes, production never fully returns to previous levels.
Production is already falling
Goldman Sachs estimates Iran has already cut output by as much as 2.5 million barrels per day. If the blockade continues, Kpler believes production could fall even further.
By mid-May, Iran's crude output could drop to around 1.2 to 1.3 million barrels per day. That would be more than half below normal levels.
Such a decline would be a major blow to Tehran.
Iran revives old tanker
To buy time, Iran has turned to unusual measures. It has reportedly reactivated the Nasha, a 30-year-old oil tanker. The ship is being used as extra floating storage. This shows just how serious the situation has become.
When countries start dusting off ageing tankers, it usually means available storage is running dangerously low.
Can Iran send oil by rail?
Iran is also trying another option. According to The Wall Street Journal, Tehran is exploring rail exports to China. Rail links connect Iran to Chinese cities such as Yiwu and Xi'an.
But moving oil by train is expensive and slow. The journey can take weeks.
For China's smaller independent refineries, known as teapots, tanker shipments are far cheaper. That makes rail a temporary fix at best.
Financial pain will come later
Interestingly, Iran may not feel the financial hit immediately. Iranian crude usually takes about two months to reach China. Payment often takes another two months after delivery.
That means the full impact on government revenues may not become clear for three to four months. For now, the storage problem is the more urgent threat.
US issues fresh warning
US Treasury Secretary Scott Bessent said Iran's oil industry is already beginning to shut down. He wrote on social media that the surviving leaders of the Islamic Revolutionary Guard Corps were "trapped".
He also warned that Iran could soon face petrol shortages.
His comments underline Washington's confidence that the blockade is working.
Peace talks remain uncertain
At the same time, diplomatic efforts are continuing. Iran has reportedly proposed a plan that would reopen shipping through the Strait of Hormuz.
In return, it wants the United States to lift its blockade. US Secretary of State Marco Rubio said the proposal was better than expected.
However, he insisted any final agreement must stop Iran from developing nuclear weapons. Iran rejected what it called America's "illegal and irrational demands".
That means a breakthrough is far from certain.
Oil prices are climbing
Markets are reacting quickly. Brent crude rose above $113 a barrel on Wednesday. US West Texas Intermediate climbed above $101.
Both are well above levels seen before the latest escalation.
Traders fear that a prolonged blockade could remove even more oil from global markets. That would push prices higher still. The Strait of Hormuz is one of the most important oil routes on Earth.
It connects the Persian Gulf to the Arabian Sea.
Around one-fifth of the world's oil supply normally passes through it. Any disruption there immediately affects global energy prices.
That is exactly what is happening now.
Wider impact on the region
The conflict is affecting more than just Iran. Regional producers including Saudi Arabia, Iraq, Kuwait and the United Arab Emirates have also reduced output since fighting began.
This has tightened global supply further.
The UAE's recent decision to leave OPEC and OPEC+ added another twist, though markets reacted calmly.
What analysts are saying
Stephen Innes of SPI Asset Management summed up the situation clearly. Iran wants the blockade removed. The United States controls that decision.
Meanwhile, every extra day adds pressure. Storage fills up. Production risks rise.
And oil markets become more nervous.
If the blockade continues, Iran faces a difficult choice. It can either keep storing oil until capacity runs out, or cut production more aggressively now.
Neither option is attractive.
A diplomatic breakthrough would ease the crisis quickly. But talks remain fragile.
For now, the clock is ticking.
A high-stakes energy battle
Iran's oil industry is approaching a critical point. Exports have collapsed. Storage is nearly full.
Production is already falling.
The longer the blockade lasts, the greater the damage could be.
For Iran, this is not just an economic problem. It is a strategic challenge.
For the rest of the world, it is another reminder of how quickly tensions in the Middle East can shake global markets.
The next few weeks could prove decisive.
(With AFP inputs)
