JPMorgan: U.S. Navy blockade will force Iran to cut oil production

Gold Finance reported that on April 22, JPMorgan Chase said in a research report that if the U.S. Navy successfully carries out a maritime physical blockade, it would force Iran to reduce its oil production. Analysts, including Natasha Kaneva, wrote in a report released on April 21: such blockade measures would not only impose restrictions at the financial level, but would also directly constrain the total volume of crude oil exports, sharply compress Iran’s room for trade through detours and indirect channels, and in the long term compel Iran to cut production.

Iran’s onshore crude oil storage capacity is about 86 million barrels; the current storage utilization rate is 54%, leaving about 40 million barrels of remaining available storage capacity, which is enough to support roughly 22 days of oil exports. In addition, about four supertankers associated with Iran are still berthed in the Strait of Hormuz, with capacity to load about 8 million barrels of crude oil, which could buffer the export window and extend it to approximately 26 days.

If the export route is completely cut off, Iran would be forced to initiate production cuts in about 16 days; by around day 30, the magnitude of production cuts would continue to increase until crude oil exports are nearly completely shut down, at which point the daily reduction would be about 1.9 million barrels.

The analyst added: the blockade may help enhance the U.S. side’s negotiating leverage, but only on the condition that the blockade measures are implemented strictly and maintained for a long period; it is expected to last for months.(Dongxin News Agency)