Iran U.S. blockade
Iran’s crude exports collapse 89% under U.S. blockade — stripping $6bn in revenue and fueling what the World Bank calls the largest oil market shock in history. MC2 Matthew Cole/WikiMedia Commons

Iran's crude oil exports fell to their lowest level in six years in May, averaging just 209,000 barrels per day — a sharp decline from nearly 1.9 million barrels per day in March, according to shipping data from Vortexa. The collapse, driven by a US naval blockade enforced since 13 April, has stripped Tehran of nearly $6 billion in oil revenue, with analysts warning the situation is far from over.

The scale of the drop — 89% in just two months — has sent tremors well beyond Iran's borders. With roughly 27% of the world's maritime crude trade passing through the Strait of Hormuz, the disruption has created what the World Bank described as the largest oil market disruption in history.

67 Million Barrels Going Nowhere

The blockade has not only halted new exports; it has trapped vast reserves already at sea. About 147 million barrels of Iranian crude and condensate are currently held in floating storage, according to Vortexa, with roughly 67 million barrels stranded inside the Gulf and Gulf of Oman, unable to move beyond the US naval perimeter.

Energy policy researcher Marc Ayoub said that 'Iran is strategically using the storage capacity it has left. The data shows the blockade is working, but the real pressure comes once that storage starts running out.'

Kpler analyst Homayoun Falakshahi warned that if the blockade remains in place for another two months, Iran could effectively run out of oil available to ship to China — its largest buyer. China's imports of Iranian crude have already fallen to 1.10 million barrels per day in May, the lowest level since January 2025, according to Kpler data, with independent Chinese refiners cutting processing rates amid weaker margins and comfortable fuel inventories.

A Supply Shock the World Cannot Ignore

The blockade's economic toll on Tehran is severe, but the consequences for global energy markets are equally significant. The World Bank's Commodity Markets Outlook for 2026 described the closure of the Strait of Hormuz as triggering the largest oil market disruption in history, sending prices sharply higher and tightening global supply.

The International Energy Agency (IEA) reported that global oil supply plummeted by 10.1 million barrels per day to 97 million barrels per day in March, driven by continued attacks on energy infrastructure and ongoing restrictions to tanker movements through the Strait of Hormuz — marking the largest disruption in history.

Global oil output is expected to fall by 6.9 million barrels per day in the second quarter of 2026, recording its largest quarterly decline since the Covid-19 pandemic, with supply reductions concentrated among producers exporting through the Strait of Hormuz.

Tehran's Economy Under Severe Strain

The blockade's impact extends beyond oil markets. Kpler noted that curtailing production comes with higher operating costs, and since Iran is also a major importer of grain, corn and rice, lower import capacity is expected to drive higher inflation internally.

According to the Central Bank of Iran, oil revenues account for roughly 65% of the country's total exports — underscoring the economy's deep dependence on hydrocarbon sales. With that lifeline now severely restricted, Iran's economy is showing signs of serious stress.

Vortexa analyst Claire Jungman said the key factors behind the collapse are 'the disruption around the Strait of Hormuz, the US naval blockade targeting vessels entering or departing Iranian ports, and the broader unwillingness of owners, operators, insurers, and counterparties to expose vessels and crews to the current security environment.'

On 1 June, Iranian negotiators ceased communication with the United States through intermediary channels, with Tehran's state-affiliated Tasnim news agency reporting that Iran had committed to entirely obstructing the Strait of Hormuz in response to ongoing ceasefire violations. Approximately 20% of the world's oil supply transited the strait before the blockade began. No timeline for lifting the naval blockade has been announced.

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