Iran Oil Shipments Halted for Seven Weeks Amid US Blockade

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London: Iran has gone nearly seven weeks without making any significant crude oil shipments through the Strait of Hormuz, as a US naval blockade severely restricts the country's oil exports and cuts off a vital source of foreign currency revenue.

Washington renewed the blockade on July 14, preventing Iranian petroleum cargoes from successfully crossing the Strait of Hormuz to China, Tehran's main remaining oil customer. Unlike prior sanctions, which Iran largely avoided through its shadow tanker fleet and other means, the blockade has severely limited the transit of oil tankers.

Iranian crude and condensate loadings have dropped substantially, from roughly 2 million barrels per day in March to approximately 220,000-255,000 barrels per day in August. Tehran is becoming more and more reliant on crude kept on tankers in Asian waters since new cargoes cannot pass through the strait.

Chinese consumers are already being impacted by the declining supply of Iranian oil. Offers for September and October deliveries have declined, while some Iranian crude is currently available at higher prices rather than the steep discounts that previously attracted Chinese independent refiners.

Iran's budget and foreign exchange reserves are under further strain as a result of the disturbance. Analysts caution that Tehran may have to rely more on local monetary financing if oil revenue declines for an extended period of time. This might aggravate inflation, which the IMF predicts will be close to 70% this year.

The disruption of shipping routes through the Strait of Hormuz has brought Iranian oil exports nearly to a halt, although years of sanctions have failed to totally stop them. The blockade marks a dramatic shift in the pressure campaign against Iran.