Iran Faces Mounting Oil Storage Crisis As Exports Choke Under US Blockade

Last Updated:April 28, 2026, 08:16 IST

Iran is grappling with a mounting oil storage crisis as a US blockade slashes exports, forcing it to rely on improvised storage and risky stopgap measures.

Iran is facing a mounting oil storage crisis as a US naval blockade chokes off exports, forcing Tehran to resort to improvised and unconventional measures to manage a growing surplus, The Wall Street Journal has reported.

As the negotiations to end the war stalled and export routes were severely restricted, the country is “scrambling to find new ways to store its oil," including reviving derelict facilities and deploying makeshift storage solutions to avoid a production shutdown that could further damage its economy.

As oil inventories swell, Iran has turned to what the report describes as “junk storage", abandoned or poorly maintained tanks, as well as containers to hold excess crude.

These stopgap measures are aimed at delaying what could become a full-blown infrastructure crisis.

Oil that cannot be exported is being redirected into any available storage option, including tanks, ships, or even left underground.

According to The Wall Street Journal, Tehran is also attempting to transport crude via rail to China, despite logistical and economic drawbacks.

The move signals increasing strain within Iran’s oil system rather than a viable long-term solution.

EXPORTS PLUNGE AFTER BLOCKADE

The US blockade, imposed on April 13, has sharply curtailed Iran’s ability to export oil.

Data from commodity analytics firm Kpler cited by the report shows a steep drop in loadings, from an average of 2.1 million barrels per day between April 1 and April 13 to just 567,000 barrels per day in the following period.

Before the war, Iran was exporting roughly 2 million barrels daily.

This dramatic decline has forced the national oil company to begin cutting production.

Analysts warn that output could fall by more than half, to between 1.2 million and 1.3 million barrels per day by mid-May if the blockade persists.

PRESSURE BUILDS ON NEGOTIATIONS

The crisis has intensified pressure on Tehran to return to negotiations.

Sanam Vakil of Chatham House told The Wall Street Journal, “The shutdown will add pressure and motivate the negotiations."

However, diplomatic efforts remain stalled. Initial talks earlier this month yielded little progress and ultimately collapsed when Iran declined further engagement.

Iran has since proposed halting attacks in the Strait of Hormuz in exchange for ending the war and lifting the blockade, though US red lines remain unchanged, according to the report.

GLOBAL OIL MARKETS FEEL THE IMPACT

The standoff is also reverberating through global energy markets.

Constraints on Iranian and Gulf exports have pushed oil prices higher, increasing fuel costs worldwide.

Brent crude futures rose nearly 3 per cent to $108.23 per barrel, the report noted, reflecting ongoing uncertainty and stalled peace talks.

The disruption has also tightened supplies of refined products such as jet fuel, placing additional strain on businesses and consumers.

STORAGE LIMITS AND RISK OF ‘TANK TOPS’

Iran’s storage capacity is nearing its limits. Onshore inventories have already increased by 4.6 million barrels to about 49 million barrels under the blockade.

Although theoretical capacity may reach up to 90 to 95 million barrels, operational constraints and safety concerns mean much of this space is unusable.

Analysts warn that Iran could hit “tank tops", industry terminology for running out of storage, within weeks.

To cope, Iran has deployed floating storage, using tankers capable of holding around 15 million barrels. But these vessels are effectively stranded, unable to access global markets.

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