Iran Oil Output at Risk as Storage Constraints Tighten

Key Moments

Storage Limits Seen as Key Constraint

Societe Generale analysts argue that Iran’s capacity to keep oil production running at full levels under the U.S. blockade is inherently limited by the amount of crude it can store onshore and on tankers. While some flexibility comes from cargoes already at sea, they state that physical storage constraints ultimately cap how long output can remain unaffected by an export disruption.

“Iran will start to face rising pressure with oil loadings slowing and oil and product stocks building by 12% since the US blockade began on April 13. Estimates vary as to how long Iran could maintain full production as it has been forced to divert crude into onshore tanks.”

Differing Views on Available Onshore Capacity

The article notes that industry views diverge on how long Iran can continue pumping at current rates. One industry assessment cited in the analysis suggests that Iran could maintain production of around 3.5 mb/d for roughly 48 days, based on domestic consumption of about 1.6 mb/d and assumed storage availability.

“According to industry sources, Iran could sustain production of around 3.5mb/d for roughly 48 days (as of the time of writing) as its domestic consumption is roughly 1.6mb/d. Energy Aspects is less optimistic on that figure, estimating that the nation has lower available onshore storage of about 30 million more barrels, giving them about two weeks ability to maintain full production.”

These differing estimates highlight uncertainty over how much onshore storage remains usable and how quickly tanks are filling as exports are constrained.

Projected Timeline for Output Curtailments

Societe Generale’s analysts suggest that production cuts would not be delayed until storage is completely saturated. Instead, they expect a phased response beginning well before maximum capacity is reached.

“Curtailments would likely begin earlier and build progressively. A reasonable rule of thumb is that Iran would need to start trimming output after roughly 16 days of a complete export shutdown, with cuts ramping up towards full export-equivalent shut-ins—around 1.7 – 2.0 mb/d (on average) —by approximately day 30.”

Under this framework, modest reductions would begin after about two weeks of zero exports, intensifying toward shut-ins equivalent to total export volumes by around one month into a full blockade.

Role of Floating Storage and Offshore Volumes

Despite mounting pressure on domestic tanks, the analysis highlights that Iran continues to earn revenue from barrels already positioned outside the immediate area of the U.S. naval operation.

“Iran, however, still retains an ability to generate revenue from crude volumes already positioned beyond the Gulf. According to Kpler, roughly 176 million barrels of Iranian oil are currently afloat, with about 142 million barrels located outside the Arabian and Omani Gulf basin—placing them beyond the immediate scope of a US naval operation centred solely on the Strait of Hormuz.”

These offshore volumes provide a near-term buffer, allowing ongoing sales even as new loadings slow and storage constraints at home tighten.