Is the main industry on which Iran’s economy relies on on the way to collapse? A new report by the international analytics company Kepler indicates that the US naval blockade of the Strait of Hormuz brings the Ayatollah regime’s oil crisis to a new peak. According to the report, Iran’s oil storage has been depleted to the point where it may run out in just 12-22 days.
The meaning, according to Kepler, is that the Islamic Republic will be forced to cut oil production by 1.5 million barrels by mid-May. Already now, following the naval blockade, Iranian production has been reduced to about 2.5 million barrels per day, according to Goldman Sachs.
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“So far, it seems that the American blockade is very effective. No ship carrying Iranian oil has been able to escape it,” the analytics company notes. Kepler also estimates that about 184,000 barrels are in the sea, 60 of which are in the Persian Gulf and the Gulf of Oman. Therefore, they cannot go to the open sea. The other 124 thousand barrels are located around Singapore and near the main customer China.
“Iran remains unable to export oil,” says Benny Sabati, an Iran researcher from the Institute for National Security Studies (INSS). “The possibility that they will commit financial suicide cannot be ruled out,” Sabati adds. “There are those who compare current Iran to Japan at the end of World War II who did not understand that they had to stop the war.”
A loss of 250 million dollars within months
Until before the blockade, Iranian oil exports were about 1.85 million barrels per day. On the other hand, the blockade reduced the export rate to only about 567 thousand barrels per day. Considering the prices of Iranian oil in the market, the losses of the Islamic Republic will amount to about 250-200 million dollars a day within three to four months.
The price of oil once again crossed the level of 110 dollars per barrel
Against the background of the dramatic announcement by the United Arab Emirates about its departure from the OPEC and OPEC+ oil cartels and the American blockade of Hormuz, oil prices continue to soar.
The price for a barrel of Brent is once again at levels of more than 110 dollars – for the first time since March 20, when a barrel of Brent was sold for 112 dollars. The last time oil was even higher was in May 2022, shortly after the Russian invasion of Ukraine.
Even in the long run, even if the war ends, prices are expected to remain high. Goldman Sachs estimates that the price of oil at the end of the year is expected to reach $90. In addition, the price of oil futures in April 2027 crossed the record high and now stands at over 82 dollars per barrel, above the record of 81 dollars recorded last March.
The beneficiaries: the American exporters
Now, the world’s oil consumers are looking for alternatives. Those who benefit in the short term are precisely the American oil exporters: they are trying to get every drop of oil out of the ground in the short term in order to take advantage of the high prices, and US oil and fuel exports have increased from 11 million barrels a day before the war to 13 million a day now, according to the US Department of Energy.
However, the industry notes that there is a limit to how much US exports can rise without long-term capital investments. Usually, an increase in production comes from the Gulf countries, which have extensive production infrastructures, but are of course blocked by the blockade of the Strait of Hormuz. The little they can export is limited by land pipelines.
Against this background, renewable energies are gaining significant momentum in recent months: the Tel Aviv Cleantech index has jumped by about 17% since the beginning of the war, compared to a few percentages in both Tel Aviv Oil and Gas and Tel Aviv 35.
At this point, the damage to Iran is not yet significantly felt. The reason is that about 90% of the Iranian exported oil reaches China, and the sailing time of the ships to the northeast of the country is about two months. From that point, Beijing has two more months to settle the payment.
In the US they already recognize – the blockade is working
“President Trump’s appetite for resuming hostilities is very low,” estimates Yaki Dayan, former Israeli consul in Los Angeles. “At the same time, he recognizes that the blockade is very effective. Therefore, a resumption of war will only be subject to the conditions from the first day of fighting in the Ari Roar. Otherwise, the blockade will continue. However, when there are so many forces in the field, including three aircraft carriers, things may have their own dynamics, especially when one person decides – the president of the United States.”
Dayan points to the stabilization of the Brent price at about $110 per barrel as a scenario that Trump can deal with, as opposed to the renewal of fighting that may increase the price to about $150 per barrel. “For the current step, the president of the United States is indeed paying a price, but this is the least bad option of the two.”
In addition, Treasury Secretary Scott Bessant recently said that the Iranians will have nowhere to store oil, so they will be forced to cut back on pumping. “Iran’s faltering oil industry is starting to take a break thanks to the US blockade,” he tweeted on the X social network.
“The Americans understand the pressure in Tehran,” says Dayan. “Bottom line, this is a war about patience. Each thinks that the other will break first. They understand the point and when they internalize that they understand that the economic pressure is effective, and on the other hand the appetite for fighting is not great – they see that the blockade is a legitimate tool.”
Not just oil: a loss of 6.4 billion dollars a year
The economic pressure on Iran is not limited to the effects of the Iranian blockade on the oil industry. Meanwhile, the Iranian customs data shows a grim picture: according to the data, non-oil trade fell in the last month of the Persian year (February 21-March 22) to about 6.4 billion dollars, 30% less than the previous month and 50% compared to the corresponding month of the previous year.
The significant factor that influenced this drop was the United Arab Emirates, Iran’s second largest trading partner, which suspended trade with it at the beginning of March. The Finance Secretary Basant clarified not long ago that in Washington they made sure to act from the United Arab Emirates, with the aim that it would tighten the supervision of the flow of the transfer of goods to Tehran, through its banking system.
At the same time, trade with China dropped drastically, as reflected in Beijing’s data. Chinese customs found that the volume of trade in March this year was 184 million dollars, compared to 907 million dollars in the same period last year. The final result is that throughout Iran’s past fiscal year, non-oil trade amounted to approximately 109 billion dollars (53% of which was imports), a decrease of 16% compared to the previous year.
The big question: will the Iranians fold?
In conclusion, the American hope for an agreement with Iran does not come in a vacuum. It is not for nothing that the Ayatollah regime demanded the lifting of the blockade as a condition for the resumption of negotiations, which in any case are expected to resume at the end of this coming week, according to reports.
The big question, as Kepler observes, is whether the commander of the Revolutionary Guards, Ahmed Vahidi, and the secretary of the Iranian National Security Council, Mohammad Bacher Zolkhader, will indeed give credit to the negotiation teams. This is a critical question, after they even tried to remove the extremist parliament speaker Mohammad Bacher Kalibaf from his position, because in their view he was too “facilitative” in the process vis-à-vis the US.
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