How Much Time Does Iran Have Before Running Out of Places to Stash Oil
Estimates range from a few days to a few weeks. But is that the right question?
The Oil Mystery Question
The Wall Street Journal discusses the The Oil Mystery at the Heart of America’s Pressure Campaign on Iran
It has become a multimillion-barrel mystery at the center of the U.S.-Iran war: How long does Tehran have before it runs out of room to store the oil it can no longer export?
The answer may help determine the outcome of the conflict.
A five-week-old U.S. naval blockade has trapped much of Iran’s oil inside the Persian Gulf, forcing Tehran to pump stranded barrels into rapidly filling storage tanks and aboard a flotilla of ships nearby.
U.S. officials are betting that when Iran exhausts places to stash the oil, it will face a costly, high-risk shutdown of its oil fields, forcing Tehran to blink in negotiations over its nuclear program and the wider conflict.
The U.S. government, oil traders and private analysts, however, are divided over exactly how much time Tehran has until it reaches “tank tops,” industry parlance for running out of storage.
Estimates of Iran’s onshore capacity range widely from 57% to 90% full, meaning Tehran could hit the wall in days—or hold out for weeks. Slowly throttling wells and using idle ships as floating storage are further helping Iran stretch the clock.
Vikas Dwivedi, global energy strategist at Macquarie, estimated that Iran’s prewar oil-sales revenue contributed roughly 10% to its gross domestic product.
“So even a total loss is not a catastrophic hit to their GDP, but it is an extremely large hit to their government revenue and the budget for military spending,” said Dwivedi.
S&P Global Energy estimates onshore crude stocks are around 57% full, below the historical range for this time of year. JPMorgan puts the number at 64%, leaving the equivalent of about three weeks of exports before they are full.
On the other end of the spectrum, data provider Kpler estimates onshore tanks to be 90% full, meaning they would be exhausted by the end of the week if the blockade continues.
The wide spread in estimates reflects the opacity of Iran’s oil system. Analysts use satellite images to measure the rise and fall of floating tank roofs, estimating from the size of the shadows they cast how full they are. However, fixed-roof tanks, private storage sites and damaged infrastructure are harder to assess. Some estimates don’t include storage at domestic refineries.
Meanwhile, Tehran has been slowly throttling well production. Instead of having to cut it all at once, it is easing back output in stages, hoping to avoid the more costly step of shutting fields and later spending weeks or months bringing them back.
Iran is also actively increasing refinery production. And it is able to export a modest amount—some 200,000 barrels a day, Eurasia’s Brew estimates—overland via rail and trucks, and the Caspian Sea.
This isn’t the first time Tehran has had to mothball its energy sector to outlast Washington, raising questions about the effectiveness of the U.S. pressure campaign this time around.
For more than three years after Trump imposed sanctions on Tehran in 2019, Iranian oil exports plummeted. Production also suffered, dropping below 2 million barrels a day. However, output surged back in 2022 and reached multiyear highs earlier this year.
That track record points to limited lasting impairment from prolonged disruptions, said Kim Fustier, an oil and gas analyst at HSBC, suggesting Tehran can afford to play the long game.
The Wrong Answers
- At the end of April, Trump said that Iran had about three days before its oil pipelines risked explosion from being clogged up.
- Last week, Treasury Secretary Scott Bessent said that Iran’s oil storage had filled up and Tehran would need to shut down oil production.
The Wrong Question
While analysts debate how much time Iran has, I laugh because it’s not the right question.
“Expectations may need to be adjusted,” Fustier said. “It’s hard to imagine that a weekslong blockade is going to achieve something different than 3.5 years of little exports did.”
Give Fustier credit for the correct line of thought.
The Right Questions
- How much more inflation can Trump take?
- How much more inflation on diesel and fertilizer will farmers take before they abandon Republicans in the midterms?
- How much more graft and incompetence will the US electorate in general take?
- How much oil well damage is Iran is willing to put up just to stick it to the US?
- How much pressure from Republican Senators and Congress can Trump take?
- How much global pressure from the world can Trump take?
- What is China directly pressures trump with rare earth minerals?
Those are the right questions. No one knows the answers to them either.
Regarding point 5, the Senate bucked Trump to pass the War Powers Act limiting Trump’s ability to fight this stupid war.
The House was scheduled to do the same, but Speaker Mike Johnson cancelled the vote. The Senate and House are now on recess until early June.
That’s a symbolic vote because Trump will veto it. However, that would be a very unpopular veto because the US public is sick of this war.
Not a Matter of Iran’s Time
The key question for Iran is number four: How much oil well damage is Iran is willing to put up just to stick it to the US?
I happen to believe it’s unlimited, or nearly so.
Meanwhile, good luck with the other six questions if JPMorgan is correct in its analysis that Iran has another three weeks before it matters.
My Basic Assumption From Day One
My basic assumption at the start of this stupid war was Iran primary goal is to inflict as much pain on the US as possible.
So far, that looks like the correct analysis. Iran has not budged. If anything, Iran has added demands.
So how much more is Trump willing to put up with? Ultimately, that’s what it boils down to if my basic assumption holds.
To date, the blockade has been a miserable US failure. So when does Trump capitulate if Iran doesn’t?