How the US naval blockade has bled Iran of nearly $6bn in oil revenues

Iran is exporting less than one-sixth of the oil it was shipping before the war began.

Iran’s crude oil exports fell to their lowest level in at least six years in May, as a United States naval blockade squeezes Tehran’s most important source of income amid a fragile ceasefire between the two nations.

The blockade on Iran’s ports, which Washington commenced on April 13, is part of President Donald Trump’s effort to pressure Iran to agree to its terms for a peace deal. Tehran has condemned the move as illegal and described the US seizure of ships around its ports as an act of “piracy”.

The US action came after Iran closed the Strait of Hormuz to ships from most countries following the start of US-Israeli attacks on February 28. The narrow waterway is the Gulf’s main route to the open ocean and normally carries about 20 percent of the world’s oil and gas supplies.

During that period, however, Iran was largely able to continue exporting its own oil. With fewer competitors able to move cargoes through the strait, Iranian exports remained strong through March and some of April, while higher oil prices boosted revenues.

New data now shows that has changed since the US began its naval blockade of Iranian ports.

Oil exports through the Strait of Hormuz account for about 80 percent of total Iranian exports. The latest shipping data suggests the blockade has sharply reduced the amount of crude Iran can sell abroad, particularly to China, its largest customer.

Analysts say the blockade is now beginning to inflict a high financial cost on the Iranian economy, raising questions about how long Iran can sustain the war.

According to data from trade intelligence firm Kpler, Iranian crude oil and condensate exports fell from close to 2 million barrels per day (bpd) to below 300,000bpd in May. Kpler used figures for the 40 days before the blockade began for comparison.

Before the blockade, Iranian exports were relatively strong through March and much of April – and benefitted from the surge in the oil price caused by the closure of the Strait of Homuz to all other shipping.

Iranian crude grades have generally traded above $90 a barrel and have occasionally exceeded $100.

Using a conservative price estimate of $90 a barrel, exports of 300,000bpd would generate about $27m in revenue each day, or roughly $837m over the course of May.

That is a sharp drop from earlier in the year. In March, when exports averaged 1.84 million bpd, Iran was earning an estimated $165.6m a day, or about $5.13bn over the month.

In April, exports averaged 1.34 million bpd, generating a