Shutdown of production facilities looms US blockade hits Iranian oil industry hard
Iran is currently unable to export any oil and storage capacities in its own country are becoming scarce. Tehran could be forced to shut down production facilities - with potentially drastic consequences.
09.05.2026, 21:16
dpa
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- Shipping traffic through the Strait of Hormuz has been at a standstill for weeks.
- The US blockade of oil shipments means high financial losses for Iran and a sharp reduction in oil production.
- This would threaten the country's future oil production - which would also be felt by the rest of the world.
By blocking the Strait of Hormuz, Iran is putting pressure on countries around the world that rely on oil and liquid gas from the region. However, Tehran's own oil industry is also increasingly suffering from the US blockade, which prevents the export of extracted oil. As domestic storage capacities are shrinking at the same time, Iran could be forced to significantly reduce its oil production or even stop it in some production areas - possibly in as little as two weeks, according to experts.
The situation is probably not as bleak as recently described by US President Donald Trump. He had stated that Iranian oil pipelines could explode within days. However, once production has been shut down, it may be difficult to restart the old facilities, if this is possible at all. This would threaten the country's future oil production. According to experts, Tehran may have already started to cut production volumes in order to avoid a complete shutdown.
At the same time, the US Treasury Department has tightened sanctions against Iranian oil shipments that are already at sea. The American armed forces seized at least two tankers off Asia that are believed to have had Iranian oil on board.
Weakening economy
The restriction on oil trade means that less hard currency is flowing back into the Iranian economy, which has been badly battered by weeks of war, several months of unrest and decades of international sanctions. As fewer oil tankers are transporting Iranian oil, the effects of the blockade in the Strait of Hormuz are also intensifying internationally. The result is a shortage of kerosene and rising fuel prices worldwide.
Due to the painful long-term effects, the Iranian leadership wants to avoid shutting down production facilities as much as possible, says Miad Maleki from the think tank Foundation for Defense of Democracies in Washington. "They are subject to sanctions, they have been isolated for 47 years now. These oil wells are not well maintained," he explains. After a shutdown, the facilities could not simply be restarted after a few months.
Before the war, Iran produced more than three million barrels of crude oil a day, just over half of it for the domestic market. However, since the start of the US blockade on April 13, ships have been loaded with oil but have not been able to sail. Production has apparently been significantly curtailed, says Antoine Halff from the environmental analysis company Kayrros. There are indications that storage facilities on the important oil island of Kharg in the Persian Gulf are not filling up as quickly as usual. Iran is probably storing some of its oil on tankers around the island, says Halff.
"Considerable financial bottleneck"
The analysis firm Kpler assumes that the country still has the capacity to store two weeks' worth of oil production - even after a reduction in output. "While the immediate impact on sales is limited, operational restrictions are now forcing production cuts and causing a delayed but significant financial shortfall," writes Kpler analyst Homayoun Falakshahi.
Another oil analysis firm, Wood Mackenzie, estimates that Iran is likely to run out of storage capacity in about three weeks. "If the blockade continues, cuts will become inevitable," explains Alexandre Araman from Wood Mackenzie. Shutdowns lasting more than a month could cause long-term damage.
A turbulent history
Since the first oil discovery in 1908, the Iranian oil industry has always been politically relevant. Efforts to nationalize the country's oil fields and end British control over them triggered the 1953 coup supported by the US intelligence agency CIA. This consolidated the rule of Shah Mohammad Reza Pahlavi. During the Islamic Revolution of 1979, which ultimately led to the overthrow of the Shah, oil production plummeted from six million barrels per day to around 1.5 million due to a labor strike. The Iranian oil industry never recovered. In decades of international sanctions, its infrastructure aged.
In his first term in office, Trump pursued a policy of "maximum pressure" and tightened sanctions against Iran. Although Tehran lost many billions of dollars in oil revenues, it could not be persuaded to reach a nuclear agreement with the USA.
Iran is now facing a combination of tougher sanctions and the blockade. A few days ago, Trump declared that the country was in a state of collapse. US Treasury Secretary Scott Bessent wrote on X that oil production would soon collapse and that Iran was facing a petrol shortage. There is no concrete evidence of this so far.
