Iran is rapidly running out of places to store crude oil, threatening to accelerate production cuts in what was once OPEC's second-largest source, according to research firm Kpler.
The Islamic Republic has enough unused storage capacity to last another 12 to 22 days, Kpler analysts wrote in a report Monday. That is raising the prospect that Iran may be forced to cut daily oil output by another 1.5 million barrels by mid-May, they added.
Iran already has curtailed as much as 2.5 million barrels of daily crude production, Goldman Sachs Group Inc. said last week. Neighboring producers such as Saudi Arabia, Iraq, Kuwait and the UAE are also among nations that have had to reduce output since the conflict erupted on Feb. 28.
Despite the dire outlook for Iranian oil output, the regime in Tehran probably won't begin to fully feel the financial pinch for months, Kpler wrote.
ALSO READ: Brent Crude Holds Steady At $108 As US Weighs Iran Proposal, Hormuz Stays Shut
Crude exports from the Iranian regime have fallen sharply since early-April, when US President ordered a Naval blockade of Iranian ports. As traffic through the Strait of Hormuz has dwindled, Iranian shipments have most recently dropped to about 567,000 barrels a day, Kpler said. Exports averaged about 1.85 million barrels a day in March.
Still, the the blockade won't hit Iran's profits quite as fast, with the impact to revenues not due for about three to four months, Kpler said.
Iranian crude cargoes typically take about two months to reach some Chinese ports, the main destination for the regime's crude, often arriving via opaque channels designed to circumvent sanctions. Then buyers have a further two months to settle payments, according to Kpler.
Kpler said it has not observed any tankers successfully evading the US naval blockade in the region around the the Strait of Hormuz. Loadings of Iranian crude onto tankers have plunged by roughly 70% since the US blockade took hold, the researchers noted.
ALSO READ: A New Opening? Iran FM Says Considering Trump Team's 'Request' For Talks
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
