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Reuters reported that for the first time on record Iran has gone about seven weeks without shipping meaningful crude exports through the Strait of Hormuz. The naval action has cut off one of Tehran’s main sources of foreign-currency earnings by stopping fresh cargoes from reaching its primary customer in China. Vortexa analyst Claire Jungman said even at the height of maximum-pressure sanctions in 2019-20 some Iranian crude cleared Hormuz every single month at no point did outbound flows fall to near-zero for a sustained stretch as they have since mid-July.
Data from Vortexa and Kpler place Iranian loadings of crude oil and condensate at 220,000 to 255,000 barrels per day in August. That marks a sharp decline from roughly 740,000 barrels per day in July and about 2 million barrels per day in March. Kpler analyst Homayoun Falakshahi said the collapse is draining one of Iran’s main sources of foreign-currency income and could force Tehran to finance spending by printing money risking even higher inflation which the International Monetary Fund estimates at nearly 70 percent this year the world’s third-highest after Venezuela and Sudan.
The US reinstated its blockade on Iran on July 14 as part of a six-month conflict with the measure positioned farther south between the Gulf of Oman and the Arabian Sea rather than along Iran’s entire coastline according to the Reuters report. Iran can continue limited sales to China from existing floating storage in Asia but cannot replenish those stocks as crude accumulates aboard tankers inside the strait. Washington last week sought to increase pressure by threatening countries that continue trading with Tehran while stopping short of immediately imposing penalties.
TankerTrackers.com co-founder Samir Madani said Iran currently has 29 tankers inside the strait carrying 36.11 million barrels of crude. The company’s assessment also identified 51 Iran-linked shadow-fleet tankers operating in the Gulf of Oman with another 81 making deliveries in Asia or waiting off Malaysia though Reuters could not independently verify those figures from Blackstone Compliance Services. David Tannenbaum of Blackstone Compliance Services provided the shadow fleet count in comments to the news agency.
Vortexa data show Iranian crude in floating storage west of the blockade line rose to 41.7 million barrels by August 26 from 35.5 million at the end of July while total Iranian crude afloat fell to 107 million barrels from 135 million. Madani said China can grab whatever is floating around in their neck of the woods but that is about it for now really. Once sold empty tankers cannot return to Iranian ports because of the blockade leaving vessels idle offshore.
Vortexa said 27 sanctioned tankers linked to Iran’s oil trade are currently waiting off Sri Lanka in ballast unable to return to Iran. Iranian crude remains openly available with cargoes for September and October delivery to China being offered though traders said available volumes are lower than for July and August because floating storage outside the Gulf is shrinking. The sustained halt has reduced the flow of new supply from Iranian ports since mid-July.
