{"id":11,"date":"2026-05-25T14:41:43","date_gmt":"2026-05-25T14:41:43","guid":{"rendered":"https:\/\/interstatelogisticshubs.com\/?p=11"},"modified":"2026-05-25T14:41:43","modified_gmt":"2026-05-25T14:41:43","slug":"iran-is-playing-a-risky-game-with-its-oil-fields","status":"publish","type":"post","link":"https:\/\/interstatelogisticshubs.com\/?p=11","title":{"rendered":"Iran is Playing a Risky Game With its Oil Fields"},"content":{"rendered":"
\n

There are many good reasons President Trump wants the war with Iran to end as soon as possible. Every other day, it seems, another peace deal is floated that gets buried before getting off the ground.<\/p>

Read more Spanberger Advances The Soft Coup Against America<\/a><\/p>\n

The WSJ reports that<\/p>\n

\n

There was widespread concern in Israel that the deal — a memorandum of understanding that would get oil tankers and other traffic flowing through the Strait of Hormuz but put off the question of Iran\u2019s nuclear program until later — would ease the economic and military pressure on Tehran when a regime Israel considers an existential threat is at a weak point.<\/p>\n

Gulf Arab states, meanwhile, were eager to avoid further attacks on their energy facilities and get their oil sales moving again, but were grappling with the prospect that a deal would leave Iran with an overt role managing the strait and emboldened to use military threats to get its way in future disputes with its neighbors after the U.S. armada moves on.<\/p>\n<\/blockquote>\n

It\u2019s in everyone\u2019s interest that traffic start moving through the Strait of Hormuz, but the fact that Iran appears especially anxious to start moving oil through the strait underlines its importance to the regime.<\/p>\n

We don\u2019t normally think of the large Middle East oil fields are delicate beasts, but that is what they are.<\/p>\n

From Oil & Gas 360<\/em>, May 11:<\/p>\n

\n

Iran\u2019s core producing fields are dominated by mature carbonate reservoirs supported by strong aquifer drive and, in some cases, gas injection. These systems are highly sensitive to interruption. Continuous production maintains pressure gradients that slow water encroachment. Extended shut-ins allow water fronts to advance and redistribute. When wells are restarted, water cut rises, oil rates fall, and some zones never recover.<\/p>\n

This is not an abstract risk. It is basic reservoir physics. A reservoir engineer with decades of experience in Middle Eastern fields once summarized it this way: \u201cCarbonate fields forgive throttling. They do not forgive shut-ins.\u201d In fractured systems, the damage can be even more severe, with water finding preferential pathways that permanently bypass recoverable oil. For a country whose production base is already mature, the loss of even a few hundred thousand barrels per day to irreversible damage would be far more costly than any temporary export disruption.<\/p>\n<\/blockquote>\n

\n

\"\"<\/figure>\nIranians understand this very well. From the beginning of the conflict, they\u2019ve been throttling back production, expanding floating storage, putting marginal tanks back into service. Limiting factors are how much oil you can store and for how long, plus how much you can throttle back production without causing permanent damage to your oil fields. Iran has a formidable storage capacity, but<\/p>\n
\n

Iran\u2019s headline storage numbers have long created a false sense of comfort. Nameplate capacity, however, is an accounting construct, not a physical reality. Tanks carry heel volumes, accumulated sludge, water contamination, and segregation constraints tied to crude quality and sulfur content. A significant portion of Iran\u2019s storage infrastructure is dedicated to condensate or refined products and cannot be repurposed for export crude without operational compromise. As one senior physical crude trader put it, \u201cStorage doesn\u2019t run out when the last tank is full. It runs out when the next barrel has nowhere clean and efficient to go.\u201d<\/p>\n

That marginal barrel problem emerges well before any visible \u201ctank tops\u201d moment. It is especially acute near Kharg Island, which handles the overwhelming majority of Iran\u2019s crude exports. Kharg is not merely a storage site; it is the central node of Iran\u2019s export system. Constraints there propagate backward through the entire value chain, shaping production decisions far upstream. A former regional energy official once described it bluntly: \u201cYou can have space somewhere in the country and still be effectively full where it actually matters.\u201d<\/p>

Read more Hello world!<\/a><\/p>\n<\/blockquote>\n

About 1\/5 of the world\u2019s oil flows through Hormuz, and Iran controls the ability to disrupt that flow. A different article from Oil and Gas 360<\/em> argues that<\/p>\n

\n

External pressure has reshaped Iran\u2019s economy many times without fundamentally altering its strategic posture. In fact, pressure has often reinforced the importance of asymmetric leverage, including Hormuz itself. A former regional diplomat once put it bluntly: \u201cEvery time Iran feels boxed in, it leans harder on the tools that can\u2019t be sanctioned away.\u201d<\/p>\n<\/blockquote>\n

Countries Iran and China can be very resilient because of their willingness to brutalize their populations. World reliance on Middle Eastern oil and gas can be mitigated by supplies from elsewhere, such as the U.S. (including Alaska), Venezuela, offshore Brazil and West Africa, Russia, and to a lesser extent, many other locations. But not everyone is content to wait years for the international oil companies to bring other significant sources of reserves online. The United Arab Emirates say they have \u201cbuilt nearly 50% of a second pipeline that will bypass the Strait of Hormuz\u201d:<\/p>\n

\n

The new pipeline will double ADNOC\u2019s [UAE national oil company] export capacity through Fujairah, a port that sits on the Gulf of Oman just beyond Hormuz. The UAE has accelerated the construction of the project due to the Iran war. The pipeline is expected to become operational in 2027. [SNIP]<\/p>\n

More than 1 billion barrels of oil have been lost due to the strait\u2019s closure, ADNOC CEO [Sultan Ahmed Al Jaber] said. Nearly 100 million additional barrels are lost every week that Hormuz remains closed, he said.<\/p>\n<\/blockquote>\n

In 2025 the world consumed over 105 million barrels of oil per day (bbl\/d). Let\u2019s say 1 billion barrels lost since March 1, or 85 days. That\u2019s roughly 11,765,000 bbl\/d, or 11.2% of daily worldwide consumption (not considering the 1.8 billion bbls of global strategic reserves that the world has been burning through). That supply\/demand curve is therefore a hair trigger upon which even small fluctuations as a percentage of production can cause wild fluctuations in prices over time. For example, a 3% daily oversupply of oil over six months is almost 2 billion barrels. There is no place to store that much oil, so prices would crash amidst drastically slashed production, with some oil companies going out of business.<\/p>\n

Many people, including President Trump, rejoiced when the UAE quit OPEC recently. Except for the disruptive 1970s oil embargo, OPEC has been a stabilizing force in the industry. Our fracking boom would not exist but for OPEC\u2019s (self-interested) production cuts to keep oil prices from imploding. The Saudis even helped the Reagan administration collapse the Soviet Union when in August, 1985 they agreed to flood the market with oil in exchange for military support and protection from the U.S. The ensuing price implosion to $10\/barrel helped prod the demise of the Soviet Union, which was the world\u2019s largest oil producer at the time. (This fact was documented in Peter Schweizer\u2019s 2001 study titled Victory. The Cold war Strategy that Hastened the Collapse of the Soviet Union<\/em>\u00a0Among the collateral damage was an estimated up to 1 million jobs lost in the U.S energy sector during the 1980s — a number that dwarfed the more commonly trumpeted job losses in the automotive industry).<\/p>\n

Oil is Iran\u2019s lifeblood. Until the conflict started, demand from China did much to keep Iran\u2019s oil revenue flowing, even at sanction-driven, below-market prices. But the clock is ticking, and Iran has much to lose if it cannot resume oil shipments in the near-term future.<\/p>\n

Image: National Archives<\/strong><\/em><\/span><\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

There are many good reasons President Trump wants the war with Iran to end as soon as possible. Every other day, it seems, another peace deal is floated that gets buried before getting off the ground. Read more Spanberger Advances The Soft Coup Against America The WSJ reports that There was widespread concern in Israel […]<\/p>\n","protected":false},"author":1,"featured_media":9,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,6],"tags":[7],"class_list":["post-11","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-foreign-policy","category-iran","tag-related-topics-iran-oil"],"yoast_head":"\nIran is Playing a Risky Game With its Oil Fields - Interstate Logistics Hub<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/interstatelogisticshubs.com\/?p=11\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Iran is Playing a Risky Game With its Oil Fields - Interstate Logistics Hub\" \/>\n<meta property=\"og:description\" content=\"There are many good reasons President Trump wants the war with Iran to end as soon as possible. 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