Foreign media reported that Iran, whose crude exports have been blocked by a U.S. maritime blockade, has begun preemptively cutting oil output out of concern that storage facilities will reach capacity. Analysts said the move aims to avoid the worst-case scenario of "well damage" as tanks fill rapidly because crude cannot be sold.
Bloomberg reported on the 2nd (local time), citing a senior Iranian official, that "Iran began production cuts in advance before reaching the limit of its storage capacity." The official said, "Rather than letting tanks fill up, we are preemptively reducing production to manage capacity limits."
The United States believes that by blocking Iran's oil exports through a maritime blockade, production will ultimately have to stop as storage tanks reach saturation, and oil wells will be permanently damaged in the process. In fact, when production is halted, many wells are difficult to restore or are shut in entirely.
President Donald Trump is also pressuring Iran's oil industry, its core revenue source, based on this logic. But Bloomberg noted that "the United States is overlooking the fact that Iran, sanctioned for decades, has built up experience in managing and restarting wells." In particular, when the United States abandoned the nuclear deal in 2018 and reinstated sanctions on Iran, the country accumulated technology by repeatedly undertaking large-scale output cuts and restarts, Bloomberg explained.
However, many analysts say the current situation differs from the past. Previously, even under sanctions, Iran could use a "shadow fleet" to divert crude to China and elsewhere, but now that method has been severely constrained by the U.S. maritime blockade, they say.
Bloomberg said, "Iran also acknowledges that efforts to keep producing crude are only viable for a certain period," adding, "the key for them is whether they can hold out longer than the pain the United States suffers from high oil prices."
Forecasts also vary over the "tank top" moment when Iran hits storage limits and is forced to shut in wells. Trump recently claimed that "Iran's oil infrastructure will be paralyzed within three days," but markets judged that overly optimistic. Investment banks including JP Morgan say there is "at least about a month of leeway." Energy analytics firms estimate Iran still has 65 million to 75 million barrels of floating storage capacity.