Treasury Secretary Scott Bessent said oil storage in Kharg Island will be full in days, emphasizing the continued US blockade on ships entering and exiting Iranian ports and other efforts to financially weaken the Iranian regime.
“As @POTUS has made clear, the United States Navy will continue the blockade of Iranian ports. In a matter of days, Kharg Island storage will be full and the fragile Iranian oil wells will be shut in,” Bessent said Tuesday on social media.
“Constraining Iran’s maritime trade directly targets the regime’s primary revenue lifelines. The @USTreasury will continue to apply maximum pressure through Economic Fury to systematically degrade Tehran’s ability to generate, move, and repatriate funds,” he added, warning that those who assist Iran are vulnerable to sanctions.
Key context: The bulk of Iran’s energy production takes place on Kharg Island. Throughout the war, Iran has been able to produce and sell a significant amount of oil – slightly more than it did in the months before the war.
If the blockade is effective and Iran is running out of storage, it could have to curtail or shut off crude production, which accounts for 80% of the country’s export revenue, according to JPMorgan.
But the US Navy would need to hold the blockade for quite some time to inflict significant economic pain on Iran. It still has 176 million barrels of crude on the water, 142 million of which are in transit to their destinations or otherwise outside the Persian Gulf, according to Kpler. So it has plenty of oil left to sell – potentially billions of dollars worth.
“The blockade may add leverage in negotiations, but only if it is strictly enforced and sustained over a longer horizon, likely on the order of multiple months,” said Natasha Kaneva, head of global commodities research at JPMorgan.