Iran on brink of 'irreversible' damage to oil fields as storage runs out
Category: News & Politics
Via: vic-eldred • 7 months ago • 22 commentsBy: Ronny Reyes Published (New York Post)
S E E D E D C O N T E N T
Iran is rapidly running out of space to store its oil as President Trump continues his naval blockade in the Strait of Hormuz — which could lead to "irreversible" damage to the regime's biggest industry and lifeblood of its economy.
Massive supertankers have been spotted at Kharg Island, an oil-critical hub which controls roughly 90% of Iranian crude oil exports, Bloomberg reported, citing satellite imagery.
But with nowhere for the crude carriers to go with the US blockade around the Gulf of Oman, experts say it is a sign that the regime is using the vessels as floating storage.
Iran has repeatedly tried to push its ships through the US naval blockade, but its ships are routinely intercepted, with six tankers forced to turn back in recent days, ship-tracking data shows.
President Trump warned Sunday that the Islamic Republic had until Wednesday before Tehran reaches maximum capacity, putting billions of dollars at risk. Iran has been producing about 2 million barrels of oil a day during the war.
"If the Iranians have to shut down oil and gas production due to a lack of storage capacity, there will be permanent damage to the productivity of the oil fields," said Derek Reisfield, Co-Founder of Marketwatch and a former McKinsey consultant.
"The damage will be irreversible," he added. "The loss in capacity could easily be half a million barrels in daily production."
The Critical Threats Project at the American Enterprise Institute think-tank also estimated to The Post that Tehran likely has until April 29 before its onshore storage facilities are filled.
The AEI's estimates were matched by Energy Aspects, a UK-based fuel analyst firm, with FGE NextantECA, an energy and chemicals advisory company, claiming that Iran had about 122 million barrels of storage space, giving Tehran less than seven weeks before it has to shut down production.
But shutting down the oil fields also carries a handful of risks for the Islamic Republic.
Sudden and prolonged halts at oil production plants risk lasting damage to fuel reservoirs and make it increasingly difficult to restart operations and return to the same level of output as before.
"When you shut down production across an entire oil field, you will get water intrusion, chemical instability, which can cause things like clay swelling," Reisfield explained.
"To regenerate production, you will have to spend money."
An Iranian parliamentarian, Ahmad Bashesh Ast Ardastani, warned on Friday that the cost of restarting production should the oil fields shut down would be an enormous burden on Tehran's already struggling economy.
"We must do something about this maritime siege, because if we are forced to shut down our oil wells, we will need billions of dollars to restart them," he said, according to an Iran International translation.
"Shutting down our oil wells is not as simple as turning off a water tap," he added.
Homayoun Falakshahi, the head of Kpler's crude oil analysis team, said Iran has long suffered from underinvestment and reservoir management challenges, leaving the regime with an average recovery rate of 25% when production plants are shut.
While Iran has historically dealt with export disruptions by rotating which plants get their production curbed, the National Iranian Oil Company is "already under pressure as a growing share of oil revenues is diverted toward Islamic Revolutionary Guard Corps-linked channels, reducing funds available for upstream maintenance and recovery," Falakshahi wrote in an analysis.
Experts have said that as Iran runs out of storage, it will likely tap its fleet to hold the overflow, with evidence of such a tactic appearing last week.
On April 23, maritime trackers reported that Iran recommissioned the retired Very Large Crude Carrier (VLCC) Nasha around Kharg Island.
Trump has seized the latest strain on Iran's oil production to pressure the Islamic Republic into re-entering negotiations with the US, touting the storage limit on Sunday as a veritable ticking clock.
"When you have, you know, lines of vast amounts of oil pouring through your system, if for any reason that line is closed because you can't continue to put it into containers or ships, which has happened to them — they have no ships because of the blockade — what happens is that line explodes from within, both mechanically and in the earth," Trump told Fox News' "The Sunday Briefing."
"It's something that happens where it just explodes. And they say they only have about three days left before that happens. And when it explodes, you can never, regardless, you can never rebuild it the way it was."
A halt to Iran's oil production, however, would also lead to soaring fuel prices in the global market, adding to the already 12 million barrels a day disrupted by the war.
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"When you have, you know, lines of vast amounts of oil pouring through your system, if for any reason that line is closed because you can't continue to put it into containers or ships, which has happened to them — they have no ships because of the blockade — what happens is that line explodes from within, both mechanically and in the earth," Trump told Fox News' "The Sunday Briefing."
"It's something that happens where it just explodes. And they say they only have about three days left before that happens. And when it explodes, you can never, regardless, you can never rebuild it the way it was."
That must be why Iran made an offer to open the Strait on their end if Trump allows their ships through. Trump rightly told them NO, they must agree to ALL of his demands. It is no longer a war. It is simply a BLOCADE of Iranian oil.
Germany did that at the Treaty of Versailles and that led directly to WWII.[✘]
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So we’re forcing them to permanently destroy oil reserves, thus permanently impacting the global price of oil. Another dumbass move by the world’s most prolific dumbass.
Only Europe & Asia depends on the Strait for oil. If the price goes up and the regime is overthrown by a desperate population, it would have been well worth it.
Justice has never been better served.
Then dear leader can notch tens of thousands more innocent deaths from the desperation he precipitated (picture emaciated men and women running into machine gun fire with nothing less to lose), while the world pays more for petroleum and Europe and Asia freeze to death. Nothing is worth that.
You see, that's the kind of talk that inspires the left-wing crazies to go out and try to assassinate the President of the United States.
There was other pertinent stuff there, I guess you missed it once you sniffed the maga catnip.
Not really. The Iranian Revolutionary Guard Corps has controlled the Iranian economy. Most of the money has gone to weapons & terrorist proxies. I don't see how you can blame anyone else for that. They even killed about 40,000 of their own people within the last year. The Iranian people have a choice to make.
And in your mind, that is of no significance??
They will keep saying that as prices rise on all goods and then blame someone else.
No matter what Trump does, his supporters offer feeble excuses or dismiss as inconsequential.
In my mind Iran gets hurt the most from the blocade.
I'm trying to understand your logic. We should let this insidious regime continue to build nuclear weapons and ballistic missiles as they promote terror all over the middle east because the price of oil might go up?
The President is 100% in the right on this, but you want him to bend to Iran. Why?
Good question. I have yet to hear a logical response. How many politicians (including presidents) have said Iran can not have a nuclear weapon? And now that Trump is actually doing something about it they seem to be looking for any reason why he shouldn't try and stop them.
They most definitely are harmed by the blockade. But the harm is not isolated to Iran, it affects the global economy.
NO! Good grief man, pay attention and stop leaping off into truly ridiculous scenarios. Get a grip. I have stated many times that there is no way to stop Iran from pursuing nuclear weapons. They can be set back, but they will always rebuild until a new regime is in power that does not seek mass destruction of infidels. Until that occurs (assuming it ever will), the world must keep Iran in check. This is done primarily with diplomatic measures (and that includes sanctions) and the occasional use of destructive force to set back their nuclear enrichment progress.
I did not object to Trump's use of force last year to set them back. I object to his gratuitous war this year that seems to have no clear purpose or strategy and is demonstrably causing all sorts of damage to the global economy. For what, exactly? If Iran's nuclear ambitions were 'obliterated' last year, then why did Trump start this war?
You continue to pursue a fantasy rather than deal with what people write. Pathetic, Vic.
First step is to open your ears because the answer has been provided numerous times.
Did Trump obliterate their nuclear program last year or not? Make up your mind.
This is an important point. I heard last week or so an informed commentator state that if Iran wants a nuclear weapon or several that this country and some others are fixated on stopping them from getting it will come down to Iran's resolve to just search for a nuclear country (or wait for an opening) to buy one or several nukes. That is because as we all know from experience if you push somebody too far they will become desperate. . . and do what they feel they have to no matter how extreme.
BTW, if this commentator has this conscious thought. . . others do too! (It's in the air now.)
You think they are invincible? Why are they begging for Trump to end the blockade?
If Iran's nuclear ambitions were 'obliterated' last year, then why did Trump start this war?
Do you know whether they were or weren't obliterated? I don't think you do. Instead of endlessly calling Trump a liar, why not try to end a nuclear threat to the US as Bill Clinton SHOULD HAVE DONE WITH North Korea?
If the Iranians are dedicated to fighting to the bitter end we should take them there. Every one of the regime members may have to be killed. Don't tell us that nuclear weapons for Iran are inevitable. Israel taught us that is not true.
Yet again you invent a ridiculous claim and attribute it to me. The dishonesty continues.
With Trump there is no knowing since he cannot be trusted. If they were, then this war was unnecessary. If not, then Trump shows yet again both his pathological lying and incompetence. And that incompetence seems to worsen over time.
And of course you again put forth a ridiculous claim that in no way reflects what I wrote.
Pathetic!
MAGA morons think the only people who will be hurt by this is Iran.
Irreversible damage to its economy means Iran is winning claim the Iran/ progressive alliance
It’s odd though, just the other day irans representative in the senate was celebrating how easily Iran evaded the blockade. How could they be running out of storage since the blockade isn’t working?
The Iranian economy does not exist in isolation. This war is also damaging the US economy and the global economy.