A United States naval blockade on Iran is strangling the Islamic Republic’s main economic corridors – leaving Tehran facing a looming oil storage crisis and its citizens grappling with rising food prices and surging unemployment.
Yet unless Washington is prepared to impose its naval blockade for months longer, it will be difficult to completely dismantle an Iranian economy that has spent years adapting to US pressure and crippling sanctions.
And as much as Iran is suffering, its leaders will be aware that Trump is under pressure too, with the US president facing growing backlash over the war domestically and crucial midterms looming. Tehran may have calculated that Trump will blink first.
Only three months ago, the Iranian government was on the brink of collapse after people took to the streets nationwide to protest the poor handling of the economy. That same government was given a lifeline when the US and Israel launched its attacks, and it is now using the pretext of war to justify dire economic conditions to a nation of 92 million.
“Iran had already faced the maximum pressure campaign in Trump’s first term, and it was forced to cut its oil production by half,” Esfandyar Batmanghelidj, CEO of the think-tank Borse and Bazaar, told CNN.
“If the blockade is in place for months, it will definitely impact the economic outlook for Iran, but the Iranian expectation is that the US itself cannot tolerate that pressure for that long.”
What began as a blockade of Iranian ports more than ten days ago has expanded globally, with every ship tied to Iran facing scrutinous monitoring by US naval forces throughout its voyage.
One of the main outcomes of the blockade would be to render Iran incapable of exporting its main commodity. If the country cannot shift the millions of barrels of oil it produces daily, it could be forced to cut production. Crude oil and petroleum product exports are Iran’s primary source of foreign currency.
Iran could probably sustain current oil production for another two to three months before storage issues become “a significant consideration,” Batmanghelidj said.
Iran also still has plenty of oil storage space remaining onshore, shipping analytics firm Kpler said, noting it has almost 30 million barrels of headroom, which means it’s still weeks away from its limit.
It could even push storage capacity longer if it finds other methods of offloading the stored oil.
One option Iran is exploring is using its retired crude tankers. A 30-year-old large carrier called NASHA was observed sailing towards oil storage terminals on Kharg island to possibly offload oil and act as floating storage, a maritime intelligence company that tracks crude oil shipments Tankertrackers.com said.
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