Economic Collapse: Iran's Floating Oil Stockpile in Asia Runs Dry

The Wall Street Journal revealed that Iran lost all of its floating oil inventories in Asia by mid-October as a result of the naval blockade imposed by the United States, which prevented the replenishment of supplies designated for export to China, delivering an economic blow that threatens one of Tehran's most prominent sources of foreign currency revenue.

According to the report, over the past months, Iran relied on dozens of oil tankers stationed off the coasts of Malaysia and Singapore to store massive quantities of crude oil and sell it to Chinese refineries, as part of a trade network aimed at circumventing US sanctions. However, the tightening of the naval blockade led to the gradual depletion of these stocks until they were completely exhausted.

Volume of Iranian Oil

Data from energy market analysis firm Kpler showed that the volume of Iranian oil stored outside the country reached approximately 135 million barrels when the war broke out last February, valued at no less than $10 billion, with most of it concentrated in waters near Malaysia and Singapore.

Following the temporary lifting of the US blockade in mid-June as part of diplomatic efforts, Tehran rushed to resume its exports and rebuild its floating oil stocks, which peaked at around 90 million barrels. But the reimposition of the blockade in July caused these volumes to decline again, leading to their complete exhaustion by mid-October.

Data from other firms specializing in tracking oil tanker movements confirmed the scale of the decline, as Fortexa recorded a drop of about 6 million barrels in Iranian stocks around Singapore in early October, while the organization "United Against Nuclear Iran" noted that Iranian exports fell to levels approaching zero during August and September.

With Iranian supply disruptions, Chinese refineries turned to seek alternative suppliers, particularly from Brazil and West African countries, to compensate for the quantities they used to import from Tehran.

For its part, the US Central Command announced that the naval blockade deprived Iran of oil revenues amounting to no less than $25 billion, which could hinder the Iranian authorities' ability to finance the reconstruction of industrial and military facilities destroyed during the war.

US Central Command Commander Admiral Brad Cooper stated that the measures imposed on Iran have caused heavy economic costs for its security apparatus.

These developments are particularly significant given Iran's reliance on oil sales to provide between 30% and 40% of government revenues, in addition to being the largest source of foreign currency, making the interruption of exports an additional factor exacerbating the economic crisis.

Collapse of the Iranian Currency

The report indicated that the Iranian currency has lost about a third of its value against the dollar since the beginning of July, coinciding with continued high inflation rates, amid fears that declining oil revenues will lead to further pressures on the economy and living standards.

Analysts believe that Washington is betting on turning economic pressure into a political tool to force Tehran back to the negotiating table regarding its nuclear program, or to increase internal pressures on the Iranian authorities.

Kpler oil markets expert Homayoun Falakshahi said that the US strategy is based on the assumption that deteriorating economic conditions may push the Iranian leadership to make diplomatic concessions, or lead to the outbreak of internal protests that are difficult to contain.

Over the years, Iran developed a complex network to evade US sanctions, relying on transporting oil via tankers to waters near Malaysia and Singapore, before transferring shipments to other vessels responsible for delivering them to China, making it more difficult to track the origin of the oil and the movement of exports.

With tightened restrictions on this maritime route, Tehran attempted to resort to alternatives, including storing crude oil in old, unused tankers, and transporting some quantities overland via trucks to neighboring countries.

Despite the near halt of new exports, analysts noted that Iran may continue to receive limited payments for previous oil shipments, given that settling some deals with Chinese buyers can take two months.

In contrast, the report stated that oil flows from the rest of the Middle East continued, even exceeding pre-war levels, thanks to US security measures protecting navigation in the Strait of Hormuz.