Kpler reports Iran’s offshore oil reserves depleted amid U.S. blockade

Central Command says blockade denied Iran at least $25 billion in oil revenue

Kpler analysts said Iran’s offshore oil reserves in Asian waters were fully depleted by mid-October as a U.S. maritime blockade on tankers leaving Iranian ports prevented Tehran from replacing the crude it normally sells to Chinese refineries. U.S. Central Command said the blockade has denied Iran at least $25 billion in oil revenue and will constrain Tehran’s ability to replace destroyed factories and weapons.

For most of the war, dozens of oil tankers held millions of barrels of Iranian crude in waters in Asia, forming a floating reserve that Iran steadily sold to China, its main customer, generating billions in cash. By mid-October, Kpler analysts said the U.S. blockade had prevented replacement of the oil leaving those tankers. “There’s no more oil to discharge to China anymore,” said Homayoun Falakshahi, head of crude-oil analysis at Kpler.

Kpler estimated that Iran had around 135 million barrels located overseas when the war began in February, much of it off the coast of Malaysia and Singapore, likely worth around $10 billion or more after oil prices surged. Iran continued selling from that offshore reserve after the United States first imposed the blockade on Iranian oil flows in April, with the stored volume declining rapidly. Kpler data through Oct. 9 tracked the floating supply from a peak of nearly 90 million barrels to less than 1 million barrels by Oct. 5, and the analysts said the reserves were subsequently exhausted by mid-October.

A chart accompanying the report describes the April measure as a U.S. maritime blockade on tankers leaving Iranian ports, notes that the United States lifted the blockade following negotiations in mid-June, and shows the U.S. maritime blockade on tankers reimposed in mid-July. When the United States lifted the blockade as part of peace negotiations in mid-June, Iran rushed out more oil, building back its reserves until the blockade was reimposed.

Other estimates showed a major drop but were less definitive. Emma Li, an analyst at energy tracker Vortexa, estimated that about 6 million barrels of Iranian oil remained off Singapore as of Oct. 9. She said Chinese oil refineries were increasingly turning to alternative suppliers, including Brazil and West Africa. United Against Nuclear Iran, an advocacy group, calculated that Iran’s oil exports had fallen to close to zero in August and September and that floating reserves in Southeast Asia likely stood at 10 million barrels or less by early October, though the group said the precise total was difficult to determine. “They’ve got to be hurting,” said Charlie Brown, a United Against Nuclear Iran researcher. Brown said he could not say the reserves had reached zero, but “it seems likely to be well on the way to close to zero.”

The loss of oil revenue comes as Iran faces inflation and widespread shortages. U.S. Central Command, which is responsible for the Middle East, said Saturday that the blockade has denied Tehran at least $25 billion worth of oil revenue, which will, in turn, constrict Iran’s ability to replace destroyed factories and weapons. Adm. Brad Cooper, head of U.S. Central Command, said U.S. actions have “imposed devastating costs on Iran’s security apparatus.”

Falakshahi said oil sales represent around 30% to 40% of Iran’s government revenue and are its largest source of foreign exchange. The weakening Iranian currency, which has fallen by a third against the dollar since early July, is contributing to inflation.

Even as Iranian exports fell sharply, oil from elsewhere in the Middle East is flowing at levels that recently exceeded prewar levels, with U.S. protection helping secure the passage of non-Iranian oil through the Strait of Hormuz, according to the report.

The depleted floating storage was part of a transfer and storage system Iran developed over the years to get oil to its main customer, China, despite U.S. sanctions. Instead of sending oil directly to Chinese refineries, tankers linked to Iran ferried the crude to waters off the coast of Malaysia and Singapore, then transferred it to other tankers bound for Chinese refineries. The transfers made the flow harder for the United States to track and sanctions violators to punish. The waters off Malaysia and Singapore also served as a storage area.

Oil analysts said Chinese payments for Iranian oil can take around two months to arrive, meaning Tehran may still receive a trickle of funding from past sales in the weeks ahead.

Iran has defied predictions that the blockade would collapse its economy and squeeze concessions on its nuclear program for more than six months. Tehran has stored oil in derelict tanks and trucked oil to neighboring countries as the sea route closed. Analysts said alternative routes that bypass the Strait of Hormuz, including overland trucking, will not come close to replacing the oil transported by sea.

Falakshahi said U.S. economic pressure could either push Iran back into negotiations to accept a nuclear deal or spark internal protests that Iran’s government would face challenges containing. “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,” he said.

“Is it working? Yes, it’s working,” said Iman Nasseri, senior vice president of Middle East and Asia at FGE NexantECA in Dubai, who once worked in the research arm of Iran’s oil ministry. Nasseri said Iran’s government had shown resilience in the past. “Let’s wait another year and see if the system can stand.”

Iran’s government has maintained that it can withstand the pressure. At an International Monetary Fund meeting in Bangkok the previous week, Iranian central bank governor Abdolnaser Hemmati said that despite the pressure “the Iranian economy has demonstrated very good resilience, and the claim that Iran’s economy is collapsing is nothing more than an illusion.”

MSI previously reported that U.S. sanctions pressure had stranded about 20 Iranian and Iran-linked oil tankers off Sri Lanka, while Kpler analyst Homayoun Falakshahi projected oil revenues would drop to zero by December. Kpler now estimates the floating reserves supporting those sales were exhausted by mid-October, though Chinese payments for earlier cargoes may still arrive in the coming weeks.