US blockade has succeeded in stalling Iranian oil exports for the past seven weeks

Since the United States reinstated its naval blockade on Iran on July 14 as part of the six-month conflict between the two countries, no Iranian crude cargoes have successfully transited the Strait of Hormuz to China, Tehran's only remaining major oil customer. This is according to shipping trackers Kpler, Vortexa and TankerTrackers.com.

As a result, Iran can only sell crude to China from existing floating storage in Asia, supplies it cannot replenish as tankers accumulate inside the strait.

The military blockade has proven to be more successful than economic sanctions. Even at the height of the 2019-2020 maximum-pressure sanctions campaign, some Iranian crude cleared Hormuz every month, with outbound flows never falling to near-zero for a sustained period as they have since mid-July, Vortexa analyst Claire Jungman told Reuters.

Iran loaded an estimated 220,000 to 255,000 barrels per day of crude and condensate in August, down sharply from roughly 740,000 bpd in July and about 2 million bpd in March, according to Vortexa and Kpler estimates.

Kpler analyst Homayoun Falakshahi also told Reuters the collapse in exports is draining one of Iran's primary sources of foreign-currency income and could force Tehran to finance spending by printing money, risking further inflation. The International Monetary Fund estimates Iran's inflation rate at nearly 70% this year, the third-highest in the world after Venezuela and Sudan.

Washington sought to increase pressure last week by threatening countries that continue trading with Tehran, though it stopped short of imposing immediate penalties.

The US blockade does not cover Iran's entire coastline, however. Instead, it focuses on the area between the Gulf of Oman and the Arabian Sea, where US Navy vessels vet ships. Beyond that zone, dozens of Iran-linked shadow-fleet tankers remain active, according to compliance researcher David Tannenbaum.

Iranian crude remains available for September and October delivery to China, though traders said volumes are lower than in prior months as floating storage outside the Gulf shrinks. Vortexa data shows Iranian crude in floating storage west of the blockade line rose to 41.7 million barrels by August 26, while total Iranian crude afloat fell to 107 million barrels from 135 million.

Once sold, empty tankers cannot return to Iranian ports due to the blockade, leaving vessels idle offshore, including 27 sanctioned tankers currently waiting off Sri Lanka, unable to return to Iran.