Iran is rapidly approaching the depletion of its offshore oil reserves. According to Kpler estimates, there were 15 million barrels of oil remaining in floating reserves at the beginning of October, and this amount is expected to be completely drained by mid-October.
Impact of Sanctions on Iran's Oil Exports
U.S. maritime sanctions have prevented any Iranian tankers or tankers associated with the shadow fleet from leaving the Persian Gulf. This maritime blockade, which has been fully enforced for 10 weeks, has severely impacted Iran's oil exports. During a brief period in the summer when restrictions on Iranian ships and ports were temporarily eased, Iran was able to export some of its oil reserves that had accumulated in the Persian Gulf and add to its floating reserves, which are mainly stored near Malaysia.Read more: Navitas Seeking New Contractors for Sea Lion Project Amid Sanctions Threats in Argentina
However, during this time, Iran has only been able to meet the needs of its major customers, who are almost entirely Chinese, by selling oil from these floating reserves. By early this month, Iran had managed to maintain its revenue stream by drawing from these reserves. But now, these reserves are rapidly depleting.
Economic Consequences for Iran
The decline in oil revenues will directly affect Iran's economic situation. Estimates indicate that by the end of December, the Iranian government will lose a significant revenue stream that constitutes about 40% of its financing. This revenue decline means reduced budgets for meeting the country's basic needs and will exacerbate economic problems for Iranian citizens.Iranian citizens are likely to face more energy and fuel shortages, especially with the winter season approaching. Additionally, a reduction in food imports that they rely on could lead to increased public discontent. Given the inflation rate estimated at around 90%, the cost of living for many Iranians will rise sharply, which could lead to strikes and industrial actions.
In a situation where political protests are a dangerous option for many Iranians, protesters may take to the streets due to unbearable living costs and basic shortages. This situation could put additional pressure on security forces that rely on maintaining their power.
Ultimately, Iran's oil exports, which previously went 90% to China, are on the verge of completion, which could have serious repercussions for the country's economy and domestic policies.
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