https://arab.news/z7xmt
- Experts warn prolonged shutdowns increase risk of reservoir degradation, raising the likelihood that output may not fully recover to pre-crisis levels.
LONDON: A US naval blockade targeting Iranian oil exports is beginning to affect the physical limits of the country’s energy system.
The move, imposed during the latest escalation in the Iran conflict, has increased the risk of a geopolitical standoff leaving lasting damage to Tehran’s production capacity.
Since mid-April, US forces have blocked ships entering and leaving Iranian ports through the Strait of Hormuz, a vital artery for global oil flows. The move has sharply reduced tanker traffic and forced vessels carrying Iranian crude to turn back, disrupting exports that normally account for millions of barrels a day.
The result is that Iran is increasingly diverting crude into storage, both on land and at sea. Tankers are being used as floating storage, and key facilities, including those at Kharg Island, are nearing capacity.
That workaround, however, has limits. If storage reaches capacity, Iran may be forced to shut in oil wells — a step not easily reversible and which could affect output long after current tensions ease.
Recent export data suggests the pressure is building. Iran shipped some 1.84 million barrels per day in March and 1.71 million in April, according to global markets data platform Kpler. This is broadly in line with its 2025 average, but with sanctions tightening cargoes already at sea and tankers struggling to offload, the system is beginning to back up.
“Produced oil needs to go somewhere,” said Jim Krane, a Middle East energy research fellow at Rice University’s Baker Institute. “If demand sources aren’t sufficient to combust it at the rate of production, the remainder goes to storage. When storage fills, production needs to slow to the rate of demand.”
In Iran’s case, that process may already have started.
“There’s simply no place for the oil to go,” Krane said. “Tanks are full, ships are full, and the strait is closed. There isn’t enough local demand to soak up all the oil coming out of the ground.”
Shipping data and analysts point to a sharp drop in traffic through Hormuz, where only a handful of vessels are now moving compared with well over a hundred per day before the conflict. Iran appears to be dialing back output to avoid a more abrupt shutdown.
At first glance, halting production might appear to be a temporary measure, something that can be reversed once exports resume. But the reality is more complex.
Oil reservoirs rely on pressure to push crude to the surface. When wells are shut in, that balance can be disrupted.
“Shutting in production alters the fields’ reservoir pressure dynamics and, depending on the field and its age, can reduce recovery efficiency,” said global energy markets expert Bachar El-Halabi.
The risks are not uniform; some fields are more resilient, and operators can manage short-term shut-ins. But in older reservoirs, which make up a significant share of Iran’s oil base, the impact can be more pronounced.
“In mature fields, especially prolonged shut-ins risk making some of that oil either harder, or more expensive, to bring back,” said El-Halabi. “The older the fields, the larger the risk of damage.”
In industry terms, a “shut-in” refers to the temporarily closure of oil wells to stop the flow of crude. In contrast a shutdown typically implies a broader halt to production across facilities or fields.
Extended shutdowns can lead to pressure loss, water ingress and other forms of reservoir degradation. Production can recover, but not always quickly, and not always to previous levels.
“That doesn’t mean production can’t recover,” El-Halabi said, “but it may not return to previous levels, or not as quickly, and definitely not at the same cost.”
Restarting production is also not immediate. It often requires well intervention and technical adjustments, adding to both time and expense, a challenge compounded by years of sanctions and underinvestment.
“The longer the shutdown, the higher the operational complexity and the greater the risk of underperformance versus pre-shutdown levels,” El-Halabi said.
That helps explain why Iran has so far sought to avoid shutting in wells altogether. Once production stops, restoring it is not simply a matter of turning it back on.
For Iran, the stakes go beyond short-term revenue losses. A prolonged disruption risks turning a temporary export squeeze into a longer-term hit to production capacity.
“If Iranian supply is structurally impaired, not just temporarily constrained, it tightens the medium-term supply outlook,” El-Halabi said.
Global markets may be able to absorb short-term disruptions, particularly if other producers increase output. But the wider conflict has already underscored how vulnerable global energy flows are to disruption in the Gulf.
Roughly a fifth of the world’s oil normally passes through the Strait of Hormuz, meaning prolonged instability in the waterway can quickly ripple through prices and supply chains.
“Middle East Gulf producers can step up and replace volumes lost from Iran,” El-Halabi said. “Except that it might come at a political and security risk, given Iran’s now proven appetite to attack its neighbors’ energy infrastructure.”
For now, Iran appears to be managing the pressure by storing unsold crude and slowing output at the margins. But as storage fills and export routes remain constrained, that strategy may become harder to sustain.
If the situation persists, Tehran may face a narrowing set of options: cut production on its own terms or risk a shutdown that could prove more difficult and costly to reverse.