Oil terminals located on Iran’s Kharg Island — the embattled Islamist regime’s main offshore conduit for sending oil abroad — have been empty for weeks, evidence that the American blockade of Iran is biting deeply into Tehran’s ability to move oil out of the country and on to markets abroad.
In fact, Iran is being forced to the unthinkable — not ship oil out over the open ocean.
Recent reporting by Bloomberg, citing European Union satellite data as well as an examination of data related to ship tracking, shows that the current lull in maritime traffic to Kharg Island is the lowest it has been since February, when the United States and Israel jointly launched the opening salvos of Operation Epic Fury, the ongoing military operation against Iran.
Capt. Andrew “Dojo” Olson, F-35 Demonstration Team pilot and commander performs aerial maneuvers during the Wings Over Houston Airshow Oct. 18, 2019, in Houston, Texas. The show featured performances from the U.S. Air Force Thunderbirds, Tora, Tora, Tora, and Oracle. (U.S. Air Force photo by Senior Airman Alexander Cook)
NAS PATUXENT RIVER, Md. — An F-35 Lightning II test pilot conducts flight test Sept. 10 to certify the carrier variant of the fighter aircraft for carrying the AGM-158C Long-Range Anti-Ship Missile (LRASM). As part of ongoing integration efforts, the Pax River F-35 Integrated Test Force (Pax ITF) team flew two days of test flights to evaluate flutter, loads, and flying qualities with two AGM-158 loaded on external stations. LRASM is a defined near-term solution for the Offensive Anti-Surface Warfare (OASuW) air-launch capability gap that will provide flexible, long-range, advanced, anti-surface capability against high-threat maritime targets. The Pax River ITF’s mission is to effectively plan, coordinate, and conduct safe, secure, and efficient flight test for F-35B and C variants, and provide necessary and timely data to support program verification / certification and fleet operational requirements.
Citing data from Kpler and Vortexa, Bloomberg also reports that while Iran shipped one million barrels of oil out via Kharg Island as recently as July, those exports have dropped to nothing as of August.
Until about April, Iran kept some of its shipments flowing.
It sent almost 650 million barrels abroad, most of which China ultimately purchased.
Iran Squeezed — but Conflict Continues
Over the weekend, Iran’s Islamic Revolutionary Guard Corps, popularly known by its acronym IRGC, said that a pair of oil tankers, collectively transporting about four million barrels of oil, had caught fire after they struck naval mines laid within the Strait of Hormuz.
It was not immediately clear under which flag the ships sailed or where they were intendto of come from.
While Iran may be feeling an acute pinch from the American blockade, the country can still lash out at neighbors throughout the region and catalyze significant changes in the market.
Posting to social media last week, United States Central Command said that the economic pressure on Iran amounts to 25 billion dollars in lost oil export revenues and approximately 350 million dollars in cryptocurrencies that Iran no longer has access to.
On Friday, Brent crude futures, a global benchmark for oil prices, jumped to $110 per barrel, though prices moderated somewhat after the spike.
The impetus for the price spike was attacks by Houthi rebels against their arch-adversary Saudi Arabia.
The group, backed by Iran, launched several missiles and drones at Riyadh, the Saudi capital city, as well as toward the Kingdom’s Red Sea port at Yanbu.
Oil Still Flows thanks to Hormuz Alternatives.
The oil facilities at Yanbu have quickly become one of Saudi Arabia’s most important lifelines for oil.
The port, accessed by the East-West Pipeline that cuts through the Saudi desert to the Red Sea, bypasses the Strait of Hormuz entirely and has quickly become a vital alternative to that maritime bottleneck Iran has previously stopped.
Although Yanbu and the East-West Pipeline do not fully replace Saudi Arabia’s eastern export infrastructure, the Red Sea alternative has kept Saudi oil flows from stopping entirely and contributed to the more modest-than-anticipated oil price spikes predicted during the first days and weeks of the ongoing conflict.
In September, energy exports via the Strait of Hormuz surpassed eighty percent of their pre-war levels, though oil exports have since been more modest.
Still, as of mid-week last week, nearly 9.5 million barrels of oil per day were moving through the maritime passageway, roughly seventy percent of the levels recorded before the war in Iran began in late February, CNBC reported, citing data from Kpler.
The Ukraine Angle and the Price of Oil
The temporary pause on strikes in Ukraine and Russia that American President Donald Trump touted has proven to amount to very little ultimately.
Russia has resumed strikes on Ukrainian civilian infrastructure, including heating, water treatment, and power infrastructure, while also striking apartment buildings and civilian vehicles across the country.
Likewise, Ukraine has resumed its strikes against Russian energy facilities within the Russian heartland, part of what Ukrainian President Volodymyr Zelensky has previously dubbed his country’s long-range sanctions regime.
Ukrainian strikes on Russia’s oil facilities combined with Iranian strikes on its oil-producing neighbors in the region have sent oil prices, if not sky-high, significantly higher than they would otherwise have been.
On Friday, the price of diesel in the United States averaged $6.33 a gallon, according to AAA data.
Hurricane Isaias also contributed, as refineries along the Gulf Coast shut down production ahead of the hurricane’s anticipated landfall.
The Road Ahead
With midterms on the horizon, both parties are watching pump prices closely, hoping for either lower costs for American consumers or a cudgel to beat the incumbents.
And while the president has avowed not to strike Iran before the midterms, it remains to be seen if that pledge will be kept.
In the meantime, other recent reporting has shown that the Iranian regime is strengthening its air defenses as well as the protection of sensitive underground nuclear sites in anticipation of a fresh round of fighting.
About the Author: Caleb Larson
Caleb Larson is an American multiformat journalist based in Berlin, Germany. His work covers the intersection of conflict and society, focusing on American foreign policy and European security. He has reported from Germany, Russia, and the United States. Most recently, he covered the war in Ukraine, reporting extensively on the shifting battle lines in Donbas and the war’s civilian and humanitarian toll. Previously, he worked as a Defense Reporter for POLITICO Europe. You can follow his latest work on X.
