Iran Oil Exports Blocked by US Naval Port Blockade; Turning to Rail to China for Survival

According to The Wall Street Journal, under the blockade of the US Navy, Iran's oil exports have been obstructed. Compounded by the stalemate in US-Iran negotiations, Iran is stepping up its search for new oil storage methods to avoid a severe production halt and has attempted to transport crude oil to China through higher-cost railways.

The Wall Street Journal reported that due to the accumulation of oil domestically, Iran is reactivating abandoned sites known as 'waste storage facilities,' using temporary containers to store crude oil, and attempting to transport it to China via rail.

At the beginning of the war, Iran attacked some 20 vessels, blocking shipping in the crucial Strait of Hormuz, and continued to export crude oil in the following weeks. Since April 13, the US has implemented a blockade on all shipping entering and leaving Iranian ports, applying pressure on the oil-dependent Iranian economy.

Commodity analysis firm Kpler pointed out that the US blockade has caused a sharp drop in tanker loadings for Iran, a net energy exporter. Between April 1 and 13, Iran's daily average loading of crude oil and condensate was 2.1 million barrels. Since the blockade, only five shipments have been observed, and from April 14 to 23, the daily average plummeted to 567,000 barrels.

Analysts differ on how long it will take for Iran to reach 'tank tops'—a term for when storage space is exhausted—but many believe this could happen within two weeks.

Reportedly, Iran has proposed a new scheme to regional mediators, offering to stop attacks in the Strait of Hormuz in exchange for a full end to the war by the US and the lifting of the blockade on Iranian ports. Under this proposal, discussions regarding Iran's nuclear program would be temporarily suspended.

Iran continues to use empty tankers for offshore storage of surplus oil. Kpler noted that several large tankers that previously carried Iranian crude remain in the Persian Gulf, with a total capacity of approximately 15 million barrels.

However, these ships cannot sail to global markets, leaving Iran to seek expedients to buy time. It has started using temporary containers and abandoned tanks in southern oil hubs like Ahvaz and Asaluyeh.

Hamid Hosseini, spokesperson for the Iranian Oil, Gas, and Petrochemical Products Exporters' Union, stated that Iran is also attempting to transport oil to China via rail. The rail facilities connect Tehran with the Chinese cities of Yiwu and Xi'an. Although this route is typically shorter than maritime voyages, it still takes several weeks.