The numbers
Before the crisis, Iran was exporting approximately 1.5 million barrels of crude oil per day. That figure comes from the Foundation for Defense of Democracies, which tracks Iranian oil shipments using satellite imagery and AIS data. It represents a significant recovery from the 2020 low of roughly 100,000 barrels per day, when Trump-era sanctions were at their most aggressive. By early 2026, Iran had rebuilt its export market, primarily through sales to China, which accounted for about 90 percent of Iranian crude purchases.
As of the last week of May 2026, those exports have collapsed. FDD's analysis, published on May 27, estimates that Iran is now exporting roughly 200,000 barrels per day. That is an 87 percent decline in less than two months. The cause is the US naval blockade, which was implemented in mid-April and has since prevented most Iranian tanker traffic from exiting the Persian Gulf through the Strait of Hormuz.
The collapse is not just a reduction in exports. Iran has also cut its own production by approximately 400,000 barrels per day, from about 3.4 million bpd to 3.0 million bpd, because it has nowhere to store the unsold crude. And the FDD analysis warns that further production cuts are likely if the blockade continues, because Iran's onshore storage capacity is approaching its limit.
Where the oil is going
Or rather, where it is not going. Before the blockade, Iran's export operation worked like this. Crude was loaded at Kharg Island, Iran's primary export terminal, or at smaller terminals like Lavan and Sirri. The oil was put onto tankers, many of them old and reflagged to obscure their ownership, and sailed east to China. The voyage took about 20 days. Some of the tankers transferred their cargo at sea to other vessels near Malaysian waters in a process called ship-to-ship transfer, which made the oil harder to trace. The Chinese refineries that bought it, mostly small independent teapot refineries in Shandong province, processed it into fuel for domestic consumption.
The US naval blockade has disrupted this operation severely. The Fifth Fleet, operating from Bahrain, has established a patrol line across the central Gulf. Iranian tankers attempting to reach the Strait of Hormuz are intercepted and turned back. Some have been seized. The US Navy has boarded at least seven Iranian tankers since mid-April, according to a Defense Department official who spoke on background. The tankers were found to be carrying crude in violation of US sanctions and were diverted to partner nation ports where the cargo was confiscated.
But not all of Iran's exports have stopped. The FDD analysis identifies roughly 200,000 barrels per day still moving, almost all of it to China. How? The answer is the shadow fleet: a collection of aging tankers with opaque ownership structures that operate outside conventional insurance and classification systems. These ships turn off their AIS transponders, sail close to the Iranian coast to minimize detection, and exit the Gulf through routes that avoid the main patrol areas. It is risky and slow, but it works, sort of. The 200,000 barrels per day that still get through represent the shadow fleet's maximum capacity under current conditions.
Oil on water
One of the most striking consequences of the blockade is the buildup of unsold crude on tankers at sea. Iran does not have enough onshore storage to hold the oil it is producing but cannot export. So it is leaving the oil on the tankers that would normally carry it to market. As of May 27, satellite imagery analyzed by TankerTrackers.com shows approximately 28 fully loaded Iranian tankers at anchor in the Gulf, holding an estimated 42 million barrels of crude with nowhere to go.
These floating storage tanks are a financial liability. Each VLCC costs roughly $30,000 per day to charter. Twenty-eight vessels at anchor for weeks means hundreds of millions of dollars in charter costs alone. Then there is the value of the oil itself. At current Brent prices of approximately $78 per barrel, 42 million barrels represents $3.3 billion in unsold inventory sitting on ships that cannot move. The oil will degrade over time if stored in ship tanks for extended periods, reducing its value. And every day the blockade continues, more crude is loaded onto more tankers, adding to the backlog.
I spoke with a commodity analyst at a Singapore-based trading house who has been tracking the floating storage. He told me: "Iran is essentially running a floating pipeline with no outlet. The tanks are filling up. At some point, they either have to shut in production entirely or find a way to move the oil. The shadow fleet can only do so much."
China's role
China is the only major buyer still purchasing Iranian crude. This is not new. China has been Iran's primary customer since US sanctions were reimposed in 2018, and it has developed sophisticated mechanisms to circumvent those sanctions. The mechanisms include the ship-to-ship transfers I mentioned, the use of yuan-denominated contracts to avoid the dollar-based financial system, and the routing of payments through small Chinese regional banks that are less exposed to US secondary sanctions.
What has changed since the blockade is the cost of moving the oil. Before the crisis, a shadow fleet tanker could sail from Kharg Island to Shandong in about 20 days. Now, the same voyage takes 30 to 35 days because the tanker has to take evasive routes to avoid US Navy patrols. The longer voyage means higher charter costs, more fuel consumption, and greater risk. Chinese buyers are still purchasing, but the volumes are reduced because the logistics have become harder.
There is a political dimension too. China has been careful not to publicly endorse Iran's actions in the Strait of Hormuz. The Chinese Foreign Ministry has called for "de-escalation and the protection of free navigation," which is diplomatic language for "we want the strait open but we are not going to help you open it." China benefits from cheap Iranian crude, but it also benefits from stable global oil markets. A prolonged Hormuz closure drives up oil prices worldwide, which hurts China as a net importer. Beijing is trying to balance its relationship with Tehran against its own economic interests, and the balance is getting harder to maintain.
The global oil market
Iran's export collapse is one of several factors pushing oil prices higher, but it is not the biggest one. The bigger driver is the reduction in Gulf exports overall. Saudi Arabia, the UAE, Kuwait, and Qatar are all exporting less than they were before the crisis, because tankers cannot safely transit Hormuz. The combined export loss from all Gulf producers is estimated at 4 to 5 million barrels per day, roughly 5 percent of global supply. That is a much larger shock than the 1.3 million barrel per day loss from Iran alone.
Still, the Iranian supply loss matters because it removes a source of oil that would otherwise help offset the reduction from other Gulf producers. In a normal market, if Saudi exports were disrupted, other producers would increase output to stabilize prices. Iran cannot increase output because it is the subject of the blockade. Its oil is stuck on ships in the Gulf, waiting for a resolution that may be months away.
BloombergNEF, the energy research arm of Bloomberg, published an analysis on May 26 projecting that Brent crude could reach $91 per barrel by late 2026 if the Hormuz closure persists. That estimate assumes a gradual partial reopening of the strait, with exports recovering to about 50 percent of pre-crisis levels by the fourth quarter. If the strait remains fully closed, BloombergNEF says prices could go higher, potentially reaching $100 or more. The last time oil was above $100 was 2022, after Russia's invasion of Ukraine.
What happens to Iran's economy
Oil exports account for roughly 20 percent of Iran's government revenue and about 60 percent of its export earnings. A decline from 1.5 million barrels per day to 200,000 means a revenue loss of approximately $90 million per day at current prices, or about $2.7 billion per month. Iran has foreign exchange reserves, estimated by the IMF at around $20 billion in accessible assets, but those reserves were already under strain before the crisis. At the current rate of revenue loss, the reserves would be significantly depleted within six to eight months.
The Iranian rial has continued its depreciation. On the unofficial market, the exchange rate has moved from approximately 600,000 rials per dollar in March to about 890,000 rials per dollar in late May, a 48 percent decline. Inflation, which was already running at over 40 percent annually, is accelerating. Basic goods are becoming more expensive. The government has not imposed formal rationing, but price controls on staple foods are creating shortages as producers sell on the black market instead.
There is a grim irony here. Iran closed the Strait of Hormuz to pressure the US and its allies. The closure has hurt Iran's own oil exports far more than it has hurt anyone else's, at least in revenue terms. The US blockade, which was a response to Iran's closure, has turned Iran's leverage into a self-inflicted wound. The country that depends most on oil revenue from Hormuz is the country that shut Hormuz down. I keep thinking about that. It is like setting your own house on fire to keep intruders out. The intruders may leave. You are still homeless.
The production cuts are the clearest sign of distress. Iran did not want to cut production. Every barrel it does not pump is a barrel it cannot sell, even if the blockade ends. Once you shut in a well, restarting it is expensive and sometimes damaging to the reservoir. Iran is cutting production because it has run out of places to put the oil. The floating storage is full. The onshore tanks are near capacity. The only option left is to pump less. And less pumping means less revenue, which means more economic pain, which makes the crisis harder for Iran to sustain.
How long can Iran hold out? That depends on reserves, on Chinese willingness to keep buying through the shadow fleet, and on the domestic political tolerance for economic hardship. Nobody I spoke with this week had a confident answer. The consensus was somewhere between three and six months before the economic pressure forces a change in posture. But consensus estimates in this crisis have been wrong before. The only thing I am sure of is that the math does not work in Iran's favor. The oil is not flowing, the money is not coming in, and the ships sitting at anchor in the Gulf are getting more expensive by the day.