Iranian oil exports have effectively halted amid a renewed US maritime blockade, the Financial Times reported on Friday. According to shipping monitoring data and satellite images, no tankers have been loaded on Kharg Island, Iran’s main export terminal, for at least a week, indicating a virtual halt in Iranian crude oil shipments. The US resumed the maritime blockade of Iranian ports in mid-July after a temporary agreement to restore shipping through the Strait of Hormuz collapsed.
Operations on Kharg Island, vital to Iran’s oil industry, ceased on July 31, according to Kpler and Energy Aspects, two analytical firms specializing in energy and shipping markets. Satellite images showed that all three docks on the island were “empty for an extended period of time,” reported Windward, a maritime shipping analytics company. On Tuesday, only 16 vessels were anchored near Kharg Island, the lowest number since the beginning of last month, Windward added. About nine out of every ten barrels of crude oil exported by Iran are loaded on this small coral island in the northern Persian Gulf, as much of the country’s coastline is too shallow for large tankers to dock.
Consequences of the blockade and Iran’s position
“The blockade is effective in that there is no significant tanker movement in either direction,” said Richard Bronze, head of geopolitics at Energy Aspects. However, according to Bronze, the loss of export revenue will not immediately pressure Tehran to compromise in negotiations with the United States. “It is quite clear that the Iranians believe they have the upper hand when it comes to the Strait of Hormuz, and they are willing to accept significant economic losses to leverage their advantage,” he said. According to the FT, Iran continued to load tankers at Kharg for six months during the war with the United States and Israel, making the current halt one of the longest since the conflict began.
United Against Nuclear Iran (UANI), a Washington-based lobbying group that tracks Iranian oil shipments, said it had not recorded any tankers with Iranian crude oil leaving the Persian Gulf since July 12. Iran continues to receive revenue from cargoes that left the Persian Gulf during the ceasefire and are only now reaching buyers in Asia. According to UANI, 26 tankers under the Iranian flag arrived in waters near Malaysia, where Iranian oil is typically transshipped between vessels before being delivered to Chinese refineries. According to Bronze, Tehran may still benefit from rising global oil prices by the time these volumes are sold.
However, he said this source of revenue could be exhausted in the coming weeks. “The time during which this will generate revenue is quickly running out,” he said. The blockade also prevents Iran from replenishing its stock of empty tankers available for loading on the island. Vessels that have already unloaded oil in Asia are not returning to Iranian waters. According to UANI, several of them are waiting off the coast of Sri Lanka, while others are near Oman and Pakistan.
Negotiations continue, production may be cut
The price of Brent crude, the international benchmark, was just under $82 a barrel in London on Friday as traders continued to expect a deal that would allow shipping through the Strait of Hormuz to resume. Senior officials at Iran’s Foreign Ministry said this week that they had reached an agreement with Oman on the geographical coordinates of a new shipping route through the strait, but no progress has been made since the middle of the week. At the time, the parties reported that a joint statement was in the “final stage.”
The halt in operations at Kharg has not yet led to a significant filling of the island’s oil storage facilities, Energy Aspects noted. This may indicate that Tehran has already begun to reduce oil production to avoid a shortage of storage space. Although the negotiations between Iran and Oman are being conducted in a bilateral format, a source familiar with the situation reported that if an agreement acceptable to the parties is reached, the US will lift the blockade and restore the exemption from sanctions on Iranian oil, allowing foreign buyers to purchase Iranian oil again without the risk of sanctions, the FT reported.
Source: The Jerusalem Post
