Iran's crude exports through the Strait of Hormuz have effectively stopped for seven straight weeks, the longest such halt on record, after the US reinstated a naval blockade in July. Close to 78 million barrels of Iranian crude now sit stranded at sea, and the chokepoint's disruption is adding upward pressure on global crude prices.
Iranian crude loadings through the Strait of Hormuz collapsed to between 220,000 and 255,000 barrels per day in August, down from roughly 740,000 bpd in July. Iran was moving nearly 2 million bpd through the strait as recently as March. That marks an 87% drop in five months.
A naval blockade, not a sanctions regime
The US reinstated the naval blockade on July 14, following renewed hostilities in the broader US-Iran conflict that escalated in late February. A brief suspension in mid-June had allowed a short-lived recovery in export volumes before the cordon went back up. Unlike prior US sanctions, which relied on threatening banks and shipping firms that facilitated Iranian crude oil trade, a physical blockade at the strait itself closes off the shadow-fleet and ship-to-ship transfer workarounds that let earlier sanctions leak.
Tankers and floating storage fill up
As of late August, 29 Iranian tankers sat inside the Strait of Hormuz holding approximately 36.11 million barrels of crude. West of the blockade line, another 41.7 million barrels sit in floating storage, bringing the combined total trapped at sea to nearly 78 million barrels.
China, Iran's largest crude customer, can now only draw down existing floating storage across Asia, since no new shipments are getting through. Kpler analyst Homayoun Falakshahi has flagged that cratering foreign-currency earnings are pushing Tehran toward financing government operations through monetary expansion, a path that leads toward accelerating inflation.
Global markets feel the chokepoint
The Strait of Hormuz normally handles roughly a fifth of the world's daily oil consumption, so removing nearly 2 million bpd of supply has added upward pressure on crude prices.
Any military escalation around the strait could also disrupt non-Iranian shipping, threatening the roughly 20 million barrels per day of total crude and petroleum products that transit the waterway. Insurance premiums for vessels crossing the region have already climbed.
Source: Crypto Briefing
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