Iran’s oil sector is facing mounting pressure as the United States’ blockade chokes off its energy exports, forcing the regime into a series of risky decisions that could have lasting consequences on a critical lifeline of its economy.
The United States has continued to pressure Iran to negotiate, but the regime has rejected President Donald Trump’s conditions on its nuclear program and is now demanding the reopening of the Strait of Hormuz as a precondition for broader talks, while signaling it plans to assert control over the waterway.
“Those foreigners from thousands of kilometers away, who are greedily carrying out transgressions in the Persian Gulf and Sea of Oman, have no place here except at the bottom of its waters,” Iran’s supreme leader, Ayatollah Mojtaba Khamenei said in a Thursday statement. “Iran’s new management of the Strait of Hormuz and the corresponding legal framework will secure comfort and progress for the benefit of all the nations of the region.”
Experts say Tehran’s options are narrowing: use the oil domestically, store it, or shut down production. None are particularly attractive, and each carries its own costs — especially shutdowns, which can permanently reduce how much oil wells can produce when brought back online.
“Their storage is getting full, so it is not a question of if they’re going to have to start to curtail production, it’s a question of when,” Dustin Meyer, senior vice president of policy, economics, and regulatory affairs at the American Petroleum Institute, told The Daily Wire.
Since the outbreak of the conflict in late February, 58 Iranian oil loadings — 35 from Kharg Island — have reportedly been tracked, representing roughly 72 million barrels and more than $5 billion in revenue for the regime.
During active fighting with the United States, but before the blockade, Iran continued exporting oil through its illicit ghost fleet. Shipments averaged about 2.1 million barrels per day between April 1 and April 13, in line with pre-war levels, but fell to roughly 567,000 barrels per day after the blockade took hold, according to The Wall Street Journal.
As of Thursday, U.S. Central Command said 44 commercial vessels had been directed to turn around or return to port as part of the blockade.
According to Meyer, the risks tied to shutting down production are not just economic, but technical. Curtailing output can cause long-term damage to oil wells, depending on several factors, including the well’s age, pressure of the reservoir, and pace of the shutdown.
“As a general matter, the older the well, the lower the pressure, and the quicker the shutdown, the higher the risk of damage to the well in the near term as well as the ability to bring that well back to the production levels that it was before the shutdown,” he said.
Meyer explained that oil wells rely on a delicate internal balance of oil, gas, and water, as well as stable pressure. If production is cut too aggressively, that balance can be disrupted, making the effects long-lasting.
“If it’s an old well with low pressure and it was shut down very quickly, then the timeline for bringing it back online is much longer and the risk of permanent damage is very real,” Meyer said, noting that wells often return but with reduced output levels.
As storage capacity tightens, Iran has begun turning to improvised solutions to manage excess crude. The regime has explored alternative export routes, including limited overland shipments by rail to China, while increasingly relying on floating storage.
The regime’s desperation was evident when it reactivated a derelict 30-year-old tanker, the Nasha, which had been sitting idle for years before being repurposed to store oil offshore. According to UANI, satellite imagery showed the vessel loading crude from a jetty on the western side of Kharg Island on April 26 before departing days later.
The tanker is estimated to provide only a day or two of additional storage. According to Kpler, Iran may have roughly 20 days of usable storage remaining before it is forced to cut production.
According to Charlie Brown, a senior advisor to United Against Nuclear Iran, the Trump Administration’s pressure campaign is effectively targeting the regime.
“The regime’s economic vulnerability is far greater than its public messaging suggests,” Brown told The Daily Wire.”
Iran’s economy is overwhelmingly dependent on oil export revenue and sustained maritime pressure is now constraining both exports and storage capacity at the same time.”
Brown warned the regime will face increasing difficulty sustaining its economic model.
“Iran can endure economic pain for a considerable period, but it cannot indefinitely sustain a wartime economy if oil revenues remain severely disrupted and Chinese buyers become more cautious about exposure to sanctions or interdiction risk,” he said.
Despite the mounting strain, Iran has experience navigating similar situations. When the Trump administration intensified its sanctions campaign in 2018, Iranian oil exports effectively dropped to zero for months. The country managed the disruption without significant long-term damage to its production capacity and was able to ramp output back up to pre-sanctions levels once restrictions were lifted, according to an industry expert.
“I do think there is an unfortunate reality here that the Iranians do have experience managing their portfolio of wells during periods of fluctuating exports, and that might be an argument that they have the ability to manage this for longer than some people would expect,” the expert said.
While ordinary Iranians have long endured economic hardship, Brown said the current pressure campaign strikes more directly at the regime itself by threatening its ability to fund “regional military activities, internal repression apparatus, and patronage networks under prolonged export disruption.”
And if the regime continues to put pressure on its own population, Jonathan Schanzer, executive director of the Foundation for Defense of Democracies, said it risks a reaction from its own people.
“The Iranian people have endured an enormous amount of financial hardship over the last four-plus decades,” he said. “The regime risks triggering another uprising. The signs for such a renewed protest movement are already blinking red after the 40-day war, and the protests that preceded it. There is no way to know when any of this bubbles over.”
