Iran has only two to eight weeks left before it must curb oil production, risking long-term damage to its oil fields, experts said.
In the face of the US blockade on Iranian ports, Tehran is running out of storage space after it has been forced to divert its oil to onshore storage tanks, which only have the capacity for 122 million barrels, according to FGE NextantECA, an energy and chemicals advisory company.
With Iran’s current production of about 2 million barrels per day, the Islamic republic has only two months before it uses up all its storage space, the consultancy said.
“Once the tanks are filled, Iran would have to shut down its oil fields, which risks long-term damage to the fields,” Annika Ganzeveld, the Middle East Portfolio Manager for the Critical Threats Project at the American Enterprise Institute, told The Post.
Sudden and long-term halts at oil production plants risk permanent damage to a fuel reservoir and make it increasingly difficult to restart operations and reach the same level of output as before.
Both the AEI and Energy Aspects, a UK-based fuel analyst firm, estimate that Iran’s storage space is actually smaller, giving the Islamic republic about two weeks before its tanks are full.
“The blockade may not have a significant impact on Iranian production in April, but if it continues into May then output would need to be reduced substantially,” Richard Bronze, co-founder of Energy Aspects, told Reuters.
Iran may attempt to lower production for the remainder of the month or deploy oil tankers along its ports as temporary storage space to delay the production cuts.
“Iran’s limited storage capacity highlights the difficult position the US blockade has put Iran in,” the Critical Threats project said.
The US launched a full blockade to Iran’s ports on Monday morning, halting the Islamic republic’s exports traveling through the Strait of Hormuz.
Iran had effectively shut down the strait, with only a handful of ships passing the oil chokepoint each day, the majority of which were linked to Tehran’s shadow fleet.
With the blockade now putting a complete end to Iran’s crude export, the majority of which went to China, Tehran is likely to face steep financial woes on its already pained economy.
A halt to Iran’s oil production, however, would also lead to soaring fuel prices in the global market, adding to the already 12 million barrels a day disrupted by the war.
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