Iranian oil in floating storage has been drained amid the U.S. Navy blockade, the Wall Street Journal has reported, citing Kpler data that suggests further tightening in global oil supply.

“There’s no more oil to discharge to China anymore,” Kpler’s head of crude oil analysis, Homayoun Falakshahi, said, as quoted by the WSJ.

Before the United States imposed a blockade on Iranian ports in April, Iran had close to 150 million barrels in floating storage, the report said. That dipped to less than 50 million barrels by mid-June, when the U.S. lifted the blockade following the ceasefire deal between Washington and Tehran. Then, in mid-July, the deal collapsed, hostilities returned, and the U.S. reimposed the blockade. By mid-October, oil in floating storage had shrunk to 866,000 barrels, per the data.

“It looks like the U.S. gamble is that the economy will either push the regime back into negotiations to accept a nuclear deal, or will spark protests internally which the regime will face challenges containing,” Kpler’s Falakshahi also said.

Meanwhile, however, it is not just the Iranian economy that is suffering, which complicates matters for the United States. Fuel prices remain at record highs, especially diesel, and President Trump’s approval ratings are down ahead of the November midterms.

Iran itself has brushed off claims that its economy is close to collapsing, with the governor of the country’s central bank saying “the Iranian economy has demonstrated very good resilience, and the claim that Iran’s economy is collapsing is nothing more than an illusion,” as quoted by the Wall Street Journal.

The prospect of peace between the two remains distant, with the president of Iran and the country’s foreign minister this week signaling they cannot trust the U.S.; therefore, peace talks would be a challenge. Earlier this month, Moody’s calculated the cost of the Iran war for U.S. households at $265 billion in total.

By Irina Slav for Oilprice.com

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