Iran Gains Little from Hormuz Blockage, has no Staying Power, Currency Crashes to 1.5mn Rial Per Dollar

Ø Iran Depends Upon Hormuz Strait for Export of Oil and Petrochem and Import of Food Grains

- Arun Goyal –

[ABS News Service/23.04.2026]

The United States has imposed a naval blockade of the Strait of Hormuz 20 percent of the world’s commercial shipping may have transited the Strait of Hormuz

In 2024, according to Central Bank of Iran data and U.S. Energy Information Administration estimates, hydrocarbons represented 65 to 75 percent of Iran’s total export revenue. Virtually all of these exports (approximately 92 percent to 96 percent) must pass through the Strait of Hormuz, loaded almost entirely from a single terminal at Kharg Island.

Unlike Saudi Arabia and the United Arab Emirates, which possess substantial pipeline capacity, Iran has no meaningful alternative export corridor. In 2021, Iran officially unveiled the Goreh–Jask pipeline, a route from a key inland pumping station to a terminal on the Gulf of Oman with a nominal capacity of 300,000 barrels per day. In practice, however, the route was sharply constrained by unfinished infrastructure. During the summer of 2024, it loaded fewer than 70,000 barrels per day, and starting in October 2024, the terminal went dormant for roughly 17 months. Only one of three planned offshore mooring buoys is installed, and fewer than half of the 20 planned storage tanks are complete. Iran cannot reroute its way out of a Hormuz closure!

Imports are equally exposed. Iran is the largest importer of bulk grain and oilseed in the Middle East. Approximately 14 million of the 30 million tons of grain imported into Gulf markets annually are destined for Iran—all of it seaborne and all of it dependent on passage through the Strait of Hormuz. When the strait shut, grain deliveries to Iran’s primary port, Bandar Imam Khomeini, all but stopped. Iran scrambled to reroute through Chabahar on the Gulf of Oman, but that port can handle less than a fifth of Bandar Imam Khomeini’s throughput. Pharmaceutical and medical supply chains faced similar disruptions. (India could help Iran by land route through Pak and Afghanistan but it does not have the desire to do so).

Nearly all of Iran’s oil exports must pass through the Strait of Hormuz.

In late March, Bloomberg and other outlets claimed that Iran was earning more than $100 million in extra daily revenue as its closure of the strait blocked rival Gulf exporters. But this assertion rested almost entirely on an accounting trick: emphasizing tanker-loading data rather than confirmed sales or receipts. The widely cited figure of approximately $139 million per day was derived from “lifting data”—a measurement of crude pumped onto ships, not crude delivered and paid for or proceeds accessible to Tehran—at two terminals, Kharg Island and Jask. Loading, delivery, and payment are distinct events in Iran’s sanctions-evasion supply chain, and conflating them produces a figure that is a ceiling, not a floor. Iran has used this playbook before: in 2019 and 2020, unable to find buyers for its oil at scale, Tehran turned its fleet into floating storage to avoid curtailing production. It pursued a similar approach in March, also motivated by the real vulnerability of Kharg Island: moving crude offshore hedges against the risk of further strikes while preserving the optics of sustained output. In early March, the amount of Iranian crude oil stored on the water hit an all-time high of roughly 190 million to 200 million barrels, precisely because loading ramped up while discharges to China’s receiving terminals declined.

Iran sells its crude at roughly $10 per barrel below the international benchmark, the cost of evading sanctions. Intermediaries, brokers, and front companies extract additional commissions at every stage of Iran’s sanctions-evasion supply chain, eroding the margin on each barrel sold. What profit remains largely accumulates in yuan-denominated accounts in China that sanctions prevent Iran from converting or repatriating!

The country has 50 million to 55 million barrels’ worth of total onshore oil storage, a capacity that, before the blockade, was already roughly 60 percent full. This storage will fill up in a matter of weeks. After that point, Iran must slow the production of its wells.

Iran is also unable to supply its own fuel needs. Despite its vast oil reserves, its aging refining infrastructure produces roughly 26 million gallons of gasoline per day. So Iran the producer is a net oil importer!

Fuel prices have already surged roughly 40 percent since the recent conflict began.

Iran possessed approximately 400 million gallons of gasoline and 340 million gallons of diesel, around 12 days of national consumption and far below the International Energy Agency’s 90-day standard for net imports.

Real Crash

The value of the rial on the open market has already cratered, from 817,000 per dollar at the start of 2025 to over 1.5 million per dollar today. Iranian banks have begun limiting citizens’ withdrawals to $18 to $30 per day. In March, the regime issued its largest-ever banknote, a ten-million-rial bill, worth about $7. Oil and gas make up around 25 percent of Iran’s GDP and 80 percent of its export earnings.