Iran Kharg Blockade Day 28 — Crude Exports Down 80%, WTI Breaks $100, Storage Nearing Limit

Not a single oil tanker has loaded at Iran's Kharg Island terminal since the US naval blockade took effect on April 13 — 28 days and counting. The terminal that handles 90% of Iran's crude exports has effectively stopped. WTI crude has broken through $100 per barrel.

Kharg Island is a small coral island off Iran's Gulf coast near Bushehr. But it is the heart of Iran's oil economy: deep-water berths, large storage tanks, and pipeline links to major producing fields. Most of Iran's hard currency earnings load here onto tankers bound for Asia. That flow has been blocked for more than a month.

The Blockade — The US Navy Locks the Strait

The US naval blockade that took effect April 13 is qualitatively different from earlier financial sanctions. It physically prevents tankers carrying Iranian crude from crossing the blockade line. Ship-tracking firm TankerTrackers reported on May 12 that not a single tanker had successfully exported Iranian crude across the blockade line since it began.

• Crude export decline: down more than 80% from pre-war levels (Vortexa data)
• Iran's daily revenue loss: approximately $170 million (US Treasury Secretary Scott Bessent)
• Kharg Island loading: zero tankers since May 6 following a suspected oil spill
• Iranian crude production: was ~3.2 million barrels per day before the war — forced production cuts now underway

Some refined petroleum products are still leaving Iran because the US Treasury's OFAC has not sanctioned the tankers involved in those shipments. But crude oil exports — the main source of hard currency — are effectively at zero.

The Kharg Oil Spill — Iran Denies It

Satellite imagery captured a large oil slick spanning dozens of square kilometers west of Kharg Island between May 6 and May 8. Loading stopped entirely at the terminal immediately after. Iranian authorities denied the spill came from their terminal infrastructure, attributing it to ballast water discharged by a foreign tanker. Markets remain skeptical.

If the perception spreads that Kharg is not simply operating below capacity but unable to load cargoes consistently, the risk premium embedded in oil prices will climb further.

The Arabian Post

Iran's Survival Tactic — Floating Storage

With exports blocked, Iran has turned to floating storage. Vortexa estimates Iran currently has access to 65-75 million barrels of floating storage capacity — equivalent to roughly 37 very large crude carriers (VLCCs). Aging tankers have clustered near Kharg Island and in waters outside the blockade perimeter, storing crude at sea.

But floating storage has limits. When onshore tanks and floating tankers are both full, Iran has nowhere left to put the crude flowing from its oilfields. At that point the only option is to cut production. Iran has already begun doing this preemptively — reducing output to stay ahead of the storage ceiling.

Bessent's Warning and the Market's Math

Treasury Secretary Scott Bessent warned last week that Kharg Island storage was 'soon nearing capacity.' This reflects Washington's bet: sustain the blockade long enough that the cost of continuing the war exceeds the cost of negotiating. At $170 million per day in lost revenue, the math eventually tips.

Markets are running a different calculation. The Strait of Hormuz carries roughly 20% of global crude oil traffic. If the blockade expands from Iranian exports to a broader threat to Hormuz passage itself, WTI at $100 is just the start — Saudi, UAE, Kuwaiti, and Iraqi exports would all be in the blast radius.

What This Means for Korean Investors

Korea is an oil importer. Rising WTI and Brent prices directly increase energy import costs and raise input costs across Korean industry. The dollar-won exchange rate is also affected: higher oil prices worsen the current account balance, adding won-weakening pressure. The macro picture for Fed policy gets more complicated too — Iran-war inflation is already one of the key reasons the Fed cannot easily cut rates, and that dynamic tightens further if Kharg stays blocked.