A new assessment by Kpler indicates that Iran is approaching a critical oil storage limit as its crude exports remain severely restricted by a US naval blockade near the Strait of Hormuz. With production continuing but shipments collapsing, storage facilities—both onshore tanks and floating reserves—are rapidly filling, raising the possibility that Iran may soon be forced to significantly reduce or even halt parts of its oil output.
According to the report, Iran has only around 12 to 22 days of available storage capacity remaining under current conditions. This situation has emerged primarily because export volumes have dropped sharply since restrictions tightened in mid-April. Before the blockade, Iran was exporting close to 2 million barrels per day, but this figure has fallen dramatically, with only a handful of cargoes recorded afterward. As a result, oil that would normally be shipped abroad is now being diverted into domestic storage and tanker-based reserves, a temporary measure that is quickly reaching its limits.
The disruption in tanker movement has effectively choked Iran’s ability to access global markets. In response, Iran has attempted alternative measures, including reviving older tankers and exploring overland transport routes to key buyers such as China. However, these options are limited in scale and efficiency. Rail transport, while technically feasible, is significantly more expensive and slower than maritime shipping, making it an impractical long-term substitute for large-volume exports.
Production has already begun to adjust under pressure. Estimates suggest that Iran has cut output by as much as 2.5 million barrels per day, with further reductions likely if storage capacity is exhausted. Analysts warn that if production falls too sharply or wells are shut in abruptly, it could damage long-term output capacity, as restarting oil fields after shutdowns can be technically challenging and costly.
The broader regional context has also contributed to supply disruptions. Other producers in the region, including Saudi Arabia, Iraq, Kuwait, and the United Arab Emirates, have reportedly adjusted output levels in response to the conflict and market instability. Meanwhile, US officials, including Scott Bessent, have indicated that continued restrictions could push Iran’s oil sector toward a deeper crisis, potentially leading to fuel shortages domestically.
Despite the immediate operational strain, the financial impact on Iran is expected to materialise with a delay. Oil shipments typically take weeks to reach buyers, followed by additional time for payment cycles, meaning revenue losses may become more visible in the coming months rather than immediately.
Overall, the situation reflects a mounting pressure point in Iran’s energy sector. With limited storage space remaining and export routes constrained, the country faces a narrowing set of options. If the blockade persists, Iran may be compelled to reduce production further, potentially triggering longer-term consequences for both its economy and global energy markets.
