Can't stop Kharg Island's oil output, can't export: Iran revives dead tanker to store crude on water

Iran is running out of room to store its oil produced at Kharg Island. Exports are blocked due to the US's blockade of the Strait of Hormuz, forcing it to turn to ageing tankers as a stopgap. With the island nearing its storage capacity, the country is racing against time before its oil storage hits a breaking point.

In Short

• Iran revives a 30-year-old oil tanker, the Nasha, to store petrol on the sea
• Experts predict Iran will face a storage crisis in Kharg Island in 12-13 days
• The US blockade in the Strait of Hormuz has impacted Tehran's oil export

Iran's oil industry is caught in a bind as Tehran cannot halt production without damaging wells, and sanctions and blockade have choked exports, leaving crude piling up. The storage at Kharg Island, which produces over 90% of Iran's oil, and stores up to 30 million barrels of crude oil, is nearing capacity due to the US blockade in the Strait of Hormuz. Since a tipping point now appears imminent, Iran is now reviving its 30-year-old tanker, Nasha, to store excess oil at sea.

The move to reactivate the old tanker is to expand crude storage at Kharg Island.

The vessel Nasha, which had been idle and empty for years, is now being redeployed as floating storage to hold excess crude that cannot be exported.

The move is only a temporary fix, but Tehran's reliance on it shows how tightly the US naval blockade is constraining the country's oil infrastructure.

Maritime Analysts told Gulf News that there is only space for 13 million more barrels of oil, and the net inflows are running at about 1 million to 1.1 million barrels per day. So, at this rate, they predict that the storage will fill up in 12 to 13 days.

According to the satellite imagery provided by the Maritime tracker platform TankerTrackers, from April 16, shows three tankers loading at Iran’s Kharg Island export terminal with a combined total of 5 million barrels.

FEW OPTIONS FOR OIL STORAGE; IRAN MIGHT HAVE TO SHUT OIL WELLS

If storage reaches its full capacity, Iran might face a stark dilemma with few viable options. Oil that cannot be stored cannot continue to be produced, and oil that cannot be exported cannot generate the revenue Tehran depends on. The blockade, therefore, is not merely a military tactic. It is turning out to be an economic chokehold on Iran.

The US Treasury Secretary Scott Bessent warned earlier that Iran might soon reach its crude oil storage capacity.

This shortage of space to store oil is a major issue, as Iran would have to start closing its wells, especially the water-injection fields that require steady operation to avoid damage and long-term production losses.

WHY IRAN CAN'T JUST TURN OFF ITS OIL, GAS PRODUCTION

We had earlier explained how shutting down oil production is a complex and often irreversible process. It is rooted in geology, pressure dynamics, and engineering constraints. It isn't just like turning a water tap off.

Oil reservoirs are not vast underground pools but porous rock formations soaked with hydrocarbons, kept in place by the pressure of gas, water, and the surrounding geology. Extraction depends on managing this delicate pressure so that oil can be brought to the surface.

Abruptly shutting wells disrupts this balance. In mature fields like in most Iran fields, halting production can allow water from below to rise into the reservoir.

Once water infiltrates the oil-bearing rock, part of the oil can become permanently trapped, reducing what can ultimately be recovered. This can impact the reservoirs lifetime productivity and damage some of it permanently.

IRAN REVIVING TANKER NASHA ONLY A STOP-GAP SOLUTION

That is the reason why Iran has had to continue production at Kharg Island despite exports being hit amid the war.

Nasha is among the several tankers continuing to load crude. Oil tanker Nasha's redeployment highlights Tehran's effort to keep oil moving while reducing reliance on vulnerable onshore facilities.

But reviving Nasha is only a temporary buffer for Tehran. If the US blockade persists and exports continue to slow, Iran will be forced to choose between deeper production cuts or risking long-term damage to its upstream fields.

The stakes are high because Kharg Island is the country's primary crude export gateway. Any issue there could quickly escalate into a nationwide economic strain for Iran. For now, the reactivation of Nasha suggests Tehran is buying time, trying to delay the moment when the terminal hits a critical breaking point.

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