The naval blockade imposed by the United States on Iran initially focused attention on the obstacles to crude oil exports. However, in recent days several specialists have warned of a more serious risk: the saturation of its oil storage capacity and ―consequently― the possible obstruction of the wells. A situation that, if it occurs, could lead to dangerous long-term damage to crude extraction facilities.
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After failing in its attempt to force Iran’s unconditional surrender through military attacks and threats to “destroy a civilization,” Washington has opted for a strategy of economic wear through the maritime blockade. In this context, analyses focused mainly on the drop in exports of oil and petrochemical products, while a latent and growing crisis went almost unnoticed: the limitations of onshore storage.
The maximum capacity of these onshore tanks is 42 million barrels, according to data from the Iranian Oil Terminals Company. Other sources raise this figure to around 50 million. Despite decades of unilateral U.S. sanctions that have eroded its position as an energy power, Iran continues extracting 1.5 million barrels of crude daily that it fails to place on the international market. And before the start of the U.S. blockade, about 60% of its onshore storage capacity was already occupied.
Most of these reserves — about 30 million barrels — are concentrated on the strategic island of Jarg, in the Persian Gulf, and are fed by a network of pipelines. According to Miad Maleki, former head of the sanctions design office at the U.S. Treasury Department, when the double naval siege on Hormuz began “the Jarg tanks had about 13 million barrels of free capacity.”
In the midst of the conflict, Iran has chosen not to publish official data on the fill level of its reserves in Jarg. However, state television has implicitly acknowledged the problem in a program featuring economist and energy expert Mahdi Razmahang: “The main challenge arising from the blockade is not the oil outflow, but the entry of empty tankers to the Jarg or Jask terminals to maintain storage.”
Floating storage, threatened
The National Iranian Tanker Company ―with a fleet of about 75 ships, including nearly 40 supertankers with an approximate capacity of two million barrels each― has historically been a key tool to circumvent sanctions. Hence, Iran’s floating storage capacity has traditionally exceeded onshore storage. However, the tightening and prolongation of the blockade also threatens this advantage.
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In 2019 and 2020, after the United States left the nuclear agreement and sanctions tightened, Iran already faced a similar crisis. Razmahang recalls that “exports fell to 200,000 barrels per day and storage problems arose.” Due to the lack of financial mechanisms to collect payments from South Korea, “all tankers were sent there to unload.” A release of funds that was complex: “They were moved with difficulty to Qatar and constitute the blocked money now there.” In his view, “the United States exploits this vulnerability by preventing the entry of empty tankers.”
In recent days, Iran has even mobilized an out-of-service tanker, the Nasha, to load crude in Jarg, a clear sign that storage capacity is approaching a critical point. If the blockade remains effective and the so-called Iranian “shadow fleet” fails to access the terminals, storage capacity risks collapse in the coming weeks.
In that scenario, Iran would be forced to slow down production from its wells. But cutting or stopping extraction can damage the structure of the reservoirs and permanently reduce productive capacity. Reactivating the wells would require considerable investments and advanced technology, and some estimates suggest that a forced shutdown could permanently eliminate up to half a million barrels per day of capacity. Billions of dollars in annual revenue.
In this context, Esmail Saghab Esfahaní, vice president and head of the Iranian Energy Optimization and Strategic Management Organization, warned: “If any part of our infrastructure, including oil wells, is damaged by the blockade, we guarantee that we will inflict four times that damage on the infrastructure of the countries supporting the aggression,” he warned. “Our arithmetic is different: one oil well equals four.”
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