US Naval Blockade Cuts Off Nearly $6 Billion in Iranian Oil Revenues

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Iran’s Crude Oil Exports Hit Lowest Level in Six Years Amid US Naval Blockade

In May, Iran’s crude oil exports fell to their lowest level in at least six years, according to data from trade intelligence firm Kpler. The decline is attributed to a United States naval blockade on Iranian ports, which began on April 13.

The blockade, part of President Donald Trump’s efforts to pressure Iran into agreeing to its terms for a peace deal, has significantly reduced the amount of crude oil that can be sold abroad. Oil exports through the Strait of Hormuz, which accounts for about 80 percent of total Iranian exports, have dropped sharply since the blockade began.

Prior to the blockade, Iranian crude grades traded above $90 a barrel and occasionally exceeded $100. However, with the blockade in place, exports have declined significantly. In May, Iranian oil exports averaged below 300,000 barrels per day (bpd), compared to close to 2 million bpd in the preceding period.

The decline in oil exports has resulted in substantial revenue losses for Iran. According to data from Lloyd’s List, Iran’s oil revenues in May were approximately 84 percent lower than they were in March. The loss is estimated at around $5.8 billion over April and May.

Analysts say that while the blockade may not capture all of Iranian oil reaching buyers, as some cargoes are being transferred between vessels near Malaysia after leaving Iranian waters, it is still having a significant impact on the country’s economy. Iran is now forced to store the crude that it cannot sell, highlighting the growing economic implications of the blockade.

The data suggests that the blockade is beginning to inflict a high financial cost on the Iranian economy, raising questions about how long Iran can sustain the war.

Source: Al Jazeera