USA closed the tap: The blockade in Hormuz is choking Iran's oil exports
The American naval blockade has almost completely stopped oil exports from Kharg Island, from which about 90% of Iran's oil barrels are exported: Tehran is already reducing production, while negotiations with Oman on opening Hormuz continue.
According to a report in the Financial Times, data from shipping and satellite tracking companies shows that for at least a week, no tanker has loaded oil at Kharg Island, Iran's main oil export terminal. The data indicates that the renewed naval blockade by the United States has effectively brought a halt to Tehran's crude oil sales.
The US reimposed a naval blockade on Iranian ports in mid-July after the interim deal to reopen the Strait of Hormuz collapsed. Activity at Kharg Island, which is vital to the Iranian oil industry, stopped on July 31, according to the ship-tracking company Kpler and the consulting firm Energy Aspects.
Satellite images showed that all three loading piers at Kharg were "empty for a prolonged period of time," said the maritime intelligence company Windward. It was also reported that on Tuesday only 16 vessels were anchored in the waiting area around Kharg – the lowest number since the beginning of last month.
About 9 out of 10 barrels of crude oil that Iran exports are loaded at the small coral island in the northern Persian Gulf, because a large part of the country's coastline is too shallow and does not allow large tankers to dock there. "The blockade is effective, in the sense that there is not much movement of tankers in or out," said Richard Bronze, head of geopolitics at Energy Aspects.
However, Bronze said that the loss of export revenue is not expected to exert immediate pressure on Tehran to compromise in negotiations with the United States. "It is quite clear that the Iranians feel they have the upper hand when it comes to Hormuz, and they are willing to absorb a lot of economic pain to exploit their advantage," he said.
According to the Financial Times, Iran continued to load tankers at Kharg throughout the six months of its war with the US and Israel, so the current pause is one of the longest since the beginning of the war.
United Against Nuclear Iran (UANI), a Washington-based lobby group that tracks Iranian oil shipments, said that since July 12 it has not identified any tanker loaded with Iranian crude oil that has managed to leave the Gulf.
For now, Iran continues to receive revenue from cargoes that left the Gulf during the ceasefire period and are only now reaching customers in Asia. According to UANI, 26 tankers flying the Iranian flag have arrived in waters near Malaysia, where it is customary to transfer Iranian oil between vessels before delivering it to refineries in China.
Bronze said that Tehran might even benefit from a rise in oil prices before these barrels are eventually sold, but in the coming weeks this source of income is also expected to stop. "The sand is running out in the hourglass when it comes to how long this will continue to generate revenue," he said.
The blockade also prevents Iran from replenishing the stock of empty tankers available for loading at Kharg. Vessels that have already unloaded their cargoes in Asia have not returned to Iranian waters. According to UANI, some of them are waiting off the coast of Sri Lanka, and others have been spotted near Oman and Pakistan.
The price of Brent crude, the international benchmark, stood at just under $82 a barrel in London on Friday, as traders continue to wait for an agreement that will allow shipping traffic through the Strait of Hormuz to resume.
Senior officials in the Iranian Foreign Ministry said this week that they had reached an agreement with Oman on the geographical coordinates of a new shipping route in the strait, but since Wednesday there have been no signs of progress. On that same day, the parties said that a joint statement was in the "final stages."
The cessation of activity at Kharg has not yet led to a significant filling of the oil storage tanks on the island, Energy Aspects noted. This may indicate that Tehran has already begun to reduce oil production at its fields so as not to reach a situation where there is no storage space left.
According to the Financial Times, although the talks between Iran and Oman are being conducted bilaterally, a person briefed on the situation said that if an agreement is reached that is acceptable to the parties, the United States will lift the blockade and renew the exemption from oil sanctions, which will allow buyers to purchase Iranian crude oil freely.
