Following a new deal between President Trump and Iranian President Masoud Pezeshkian, Iran can immediately begin selling its crude oil and fuels like diesel, marking the first time since 2018. The accord, signed this week, waives sanctions and enables essential services such as banking, transportation, and insurance to facilitate these transactions. The U.S. military has lifted a two-month blockade that had reduced Iran's oil loadings to approximately 260,000 barrels a day last month, a sharp decline from the 1.85 million barrels a day loaded in the three months prior to April.
Iran swiftly capitalized on this new freedom by clinching a deal to sell 10 million barrels of crude—equivalent to five supertankers—to China, according to Hamid Hosseini, spokesman for Iran’s oil exporters union. This marks an initial step in restoring its oil export flows. Iran has a significant amount of oil in storage, with over 30 million barrels currently on Kharg Island, ready for immediate loading onto tankers in the coming weeks if the peace deal holds. Additionally, analysts estimate Iran has more than 100 million barrels of oil, with over 60 million barrels outside the U.S. blockade, that could be quickly sold.
However, a substantial increase in oil production depends on draining existing storage tanks, many of which are brimming. Empty onshore storage has fallen to 13.5 million barrels, indicating about a week of available capacity at normal production rates. Analysts predict it could take until the end of 2026, or even into early 2027, for Iran and other Gulf producers to normalize production and exports. Rahul Choudhary, an analyst at Rystad, notes that Iran will need to restart shut-in wells and drill new ones to sustain supply levels, as many of its fields are old and experiencing declining output.
The deal is seen as a significant financial incentive for Iran. Brett Erickson, a sanctions expert at Obsidian Risk Advisors, called it a "multibillion-dollar concession." The agreement also stipulates conditions, including Iran not pursuing nuclear weapons, neutralizing enriched material, and ensuring free navigation in the Strait of Hormuz. Rohit Rathod, an analyst at Vortexa, highlighted that a major takeaway for Iran is the demonstration of its ability to close the Strait of Hormuz, a crucial strategic advantage.
