An Ageing Tanker Near Kharg Has Become Iran's Oil Storage Fix. Will It Buy Tehran Enough Time? Will It Last?

Last Updated:April 25, 2026, 08:29 IST

With exports disrupted, oil is still flowing into storage at roughly one million barrels per day, meaning capacity could run out in less than two weeks

A mounting oil bottleneck off Iran’s coast is fast becoming one of the clearest economic flashpoints of the ongoing US-Iran standoff. With exports effectively choked by a naval blockade, Tehran is running out of places to put its crude and is now turning to an improvised fix: parking oil on ageing tankers just offshore as storage tanks at Kharg Island, its main export hub, near capacity.

According to a New York Post report, Iran has begun using ageing oil tankers as floating storage near Kharg Island because onshore tanks are close to full. One such vessel—a decades-old tanker—is being repurposed to hold excess crude as supplies continue to pile up.

Kharg Island handles about 90 per cent of Iran’s oil exports, making it a critical node in the country’s economy. But with exports disrupted, oil is still flowing into storage at roughly one million barrels per day, meaning capacity could run out in less than two weeks.

Why Iran Can’t Ship Its Oil

The storage crunch is a direct result of the ongoing US-led naval blockade targeting Iranian shipping and ports.

US forces have intercepted or deterred multiple tankers, forcing vessels to turn back. Some tankers attempting to leave have halted mid-journey, wary of enforcement action. The Strait of Hormuz, a vital oil chokepoint, has seen traffic collapse, with just five ships passing in a day versus roughly 140 normally.

According to Reuters, Tehran has also retaliated by seizing ships and threatening transit, further discouraging commercial traffic and insurers.

Floating Storage

Gulf News described Iran’s move as a temporary workaround, using tankers as floating storage to “buy time" as land facilities fill up.

Bloomberg, citing shipping data, noted that Iran is still loading crude onto vessels despite limited exit routes, effectively turning ships into parked storage units rather than export carriers. According to AOL, the strategy reflects urgency: Iran must keep wells running to avoid damaging reservoirs, even if it cannot sell the oil immediately.

Experts speaking to The Wall Street Journal warn that if storage fills up completely, Iran may be forced to shut down oil production, which can cause long-term damage to reservoirs and infrastructure. Estimates suggest Iran has roughly 13 days of storage capacity under current conditions before reaching that point.

Global Ripple Effects

The crisis is not confined to Iran.

The Strait of Hormuz normally carries around 20-25 per cent of global oil trade, so disruptions have outsized effects. Guardian reported that oil prices have surged above $100 per barrel amid supply fears. Countries like Japan, according to Reuters, are already seeking alternative crude supplies to offset risks.

With shipping disrupted and insurers wary, even non-Iranian oil flows are being affected.

For now, Iran’s use of floating storage shows it is trying to keep production running while waiting out the blockade. But the strategy has limits as tankers can only hold so much, prolonged storage raises costs and logistical risks, and continued blockade pressure could force production cuts.

Ultimately, the standoff is becoming a test of endurance: whether Iran can sustain its oil sector under pressure, and whether the US can maintain a blockade without triggering wider economic fallout.

News explainers An Ageing Tanker Near Kharg Has Become Iran's Oil Storage Fix. Will It Buy Tehran Enough Time? Will It Last?

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