The ongoing Middle East conflict has been disrupting global oil flows, depleting supplies, tightening reserves, and driving crude prices higher across markets. However, Iran, a key flashpoint in the crisis, is facing a different kind of pressure. Beyond struggling with disrupted exports, the country now confronts a quieter but equally awkward problem: where to store its oil. As storage space fills rapidly and the system strains under growing pressure, Tehran faces an uncomfortable question: how long can production continue before cuts become unavoidable? According to research firm Kpler, as cited by Bloomberg, the answer may be just a matter of weeks.
Iran's Storage Capacity Running Out
Kpler estimates that Iran has only 12 to 22 days of unused storage capacity left. This tight buffer could force the country to slash crude output by as much as 1.5 million barrels per day (bpd) by mid-May. This comes at a time when Iranian production is already significantly lower. Last week, Goldman Sachs Group Inc. reported that Iran has already held back up to 2.5 million bpd of crude output. Other major Gulf producers, including Saudi Arabia, Iraq, Kuwait, and the United Arab Emirates, have also reduced supply.
Financial Impact Delayed but Inevitable
Despite the tightening situation, Kpler suggests that the immediate financial impact on Iran may be delayed. The country is unlikely to feel the full revenue strain for several months. Oil exports from Iran have fallen sharply since early April when the US President ordered a naval blockade of Iranian ports. With reduced movement through the Strait of Hormuz, shipments have dropped to around 567,000 bpd, down from an average of 1.85 million bpd in March, according to Kpler.
However, the impact on Iran's revenues will not be immediate. Kpler notes that it takes around two months for Iranian crude cargoes to reach Chinese ports, the main destination for its oil exports, often moving through indirect channels aimed at bypassing sanctions. Payments from buyers then take a further two months to be settled. Thus, the final revenue impact will take anywhere between three to four months.
Blockade Effect and No Evasion Evidence
Kpler added that it has not seen evidence of tankers successfully evading the US naval blockade in the Strait of Hormuz region. Since the blockade began, loadings of Iranian crude onto tankers have fallen by nearly 70%.
Conflict Escalates with No Resolution in Sight
The Middle East crisis has now reached the two-month mark with no resolution in sight. A second attempt at a peace deal also ended coldly as Trump on Saturday cancelled his envoys' planned trip to Pakistan, where they were supposed to meet Iranian leaders in Islamabad for peace talks. He also criticized Iran's leadership, saying that 'nobody knows who is in charge.' The war began on February 28 when Israel and the US launched joint strikes on Iran. Since then, Tehran has tightened its grip on the crucial Strait of Hormuz, the world's energy pipeline that carries 20% of global oil supplies.
