Reports: Iran improvising oil storage and export routes as US blockade cuts shipments

Iran is resorting to improvised oil storage and alternative export routes as a US naval blockade chokes off its crude shipments, according to multiple international media reports citing commodity analytics firm Kpler.

With exports backing up, Tehran is reportedly reviving disused “junk storage” sites, using makeshift containers and exploring crude shipments by rail to China, in an effort to delay a wider infrastructure crisis and avoid a sharper shutdown in production.

Kpler data cited by The New York Times shows exports dropped dramatically after the blockade took hold in mid-April. While shipments averaged just over 2 million barrels per day in early April, activity slowed sharply in the following days, with only five cargoes tracked and volumes falling to roughly 567,000 barrels exported per day.

The squeeze is already forcing Iran’s national oil company to curb output, reports say, noting that production is often reduced before storage is completely full to prevent dangerous bottlenecks in the system.

The country is also rapidly running out of storage space, with Kpler estimating remaining capacity could be exhausted within 12 to 22 days. That raises the prospect of further output reductions of up to 1.5 million barrels per day, if the blockade continues.

Goldman Sachs separately estimated last week that Iran has already cut as much as 2.5 million barrels per day of crude production, while other Gulf producers, including Saudi Arabia, Iraq, Kuwait and the UAE, have also been forced to scale back output since the war began on February 28.

Despite the export collapse, Kpler says Tehran may not feel the full revenue hit for another three to four months, due to delays in payment flows and existing sales.