While the recent US port blockade has raised renewed global concerns about Iran’s energy sector, analysts say the country is not facing a major crisis anytime soon. Rather, based on its existing production and storage capacity, Iran can handle the situation even if oil exports are halted for at least two months.
Although the sanctions, which began on April 13, have put pressure on Iran’s international energy trade, market analysts say the country’s strategic reserve system will act as a ‘buffer’ in the short term. According to international media, Iran produces an average of about 3.5 million barrels of crude oil per day, a large part of which is destined for export.
China is a major buyer of Iranian oil in the global market. If this flow of about two million barrels of oil per day is interrupted, not only Iran but also the global energy supply system could be put under pressure. Especially in the context of ongoing geopolitical tensions, such supply disruptions could further increase price volatility in the international market.
Analysis by energy research institutions shows that Iran has the capacity to store about 90 million barrels of oil in its land-based storage facilities, which is more than 120 million in total capacity. This storage system will not force the country to immediately reduce production. Rather, it is possible to cope with the situation by storing the oil produced, even if exports are temporarily stopped.
However, this capacity is not sustainable. Once the storage is full, there will be no choice but to reduce production. Some analysts have also pointed to the relatively low storage capacity, which indicates that the real situation could become more pressing sooner. As such, Iran may have to make strategic decisions within a few weeks, based on current production and export rates.
Overall, the current situation suggests that while Iran may be stable in the short term, it will be difficult to avoid the effects of sanctions and geopolitical conflict in the long term. The outcome of this crisis will depend on diplomatic solutions, market reactions, and the next steps of regional powers.