Iran’s Offshore Oil Stockpile Nears Exhaustion as Blockade Chokes New Supply

What is an offshore oil stockpile, and why would Iran store crude on tankers outside its own waters?

An offshore oil stockpile is crude held on tankers at sea instead of in tanks on land. Iran accumulated barrels outside the Persian Gulf before the U.S. maritime blockade took effect. That location matters because these cargoes are already beyond the blockade line and can still be transferred or delivered to buyers.

The stockpile works as a buffer. Tankers can perform ship-to-ship transfers, moving crude between vessels without returning to Iranian terminals. UANI said about 9 million barrels were transferred in Malaysian waters during September. Those shipments were ultimately intended for Chinese independent refiners, known as “teapots.”

This buffer is shrinking quickly. UANI estimates that no more than roughly 10 million barrels remain in floating storage near Malaysia’s Eastern Outside Port Limits. Since no new Iranian crude has crossed the blockade line since July 14, future deliveries would increasingly consume a finite reserve rather than replace it.

How much Iranian crude has been used from storage, and how much is estimated to remain near Malaysia?

UANI estimates that Iranian crude inventories in floating storage near Malaysia fell sharply during September. About 9 million barrels were transferred through ship-to-ship operations during the month. These transfers drew directly on crude that had been positioned outside the Persian Gulf before the blockade.

The transfers occurred in Malaysia’s Eastern Outside Port Limits, or EOPL. UANI observed eight total ship-to-ship operations there: six involving Iranian crude and two involving LPG. The crude cargoes were ultimately headed to Chinese independent refiners, often called “teapots.”

UANI estimates that no more than roughly 10 million barrels now remain in Malaysian floating storage. Because the group says no new Iranian crude has crossed the blockade line since July 14, the reserve is not being replenished. Continued deliveries could therefore reduce Iran’s accessible supply even further.

Why has the blockade prevented new Iranian crude from leaving the Persian Gulf and reaching offshore storage?

The U.S. maritime blockade prevents fresh Iranian barrels from leaving the Persian Gulf, according to the article. UANI tracks exports when vessels cross the declared U.S. blockade line. Its data indicate that ships carrying new Iranian crude have been unable to make that crossing since July 14.

The effect is visible at Iran’s export terminals. UANI’s satellite monitoring showed no crude oil loadings during September. The limited activity involved LPG, naphtha, and fuel oil instead. Only three Handymax tankers crossed the line that month, carrying about 1.52 million barrels of Iranian LPG and methanol.

As a result, offshore storage cannot be replenished with new crude. UANI recorded Iranian exports at only 50,789 barrels per day in September, down from 966,133 barrels per day in July. The blockade has therefore shifted Iran from regular exports toward drawing down stored cargoes.

What happens to Iran’s ability to supply Chinese independent refiners when its finite offshore stockpile runs out?

Iran’s offshore stockpile currently lets crude reach Chinese independent refiners even while fresh barrels remain trapped near Iran. The stored cargo is already outside the blockade and can be transferred between tankers. This makes it a crucial substitute for normal exports.

For example, UANI said roughly 9 million barrels moved through ship-to-ship transfers near Malaysia during September. Those barrels were ultimately destined for Chinese “teapot” refineries. The transfers consumed oil that had been stored offshore, rather than crude newly loaded and exported from Iran.

If the estimated 10 million barrels remaining near Malaysia are exhausted, that workaround will largely disappear. Iran would have far fewer barrels positioned for delivery to China, and shipments to teapots could decline or stop. The article says no new crude has crossed the blockade line since July 14, so replacement supply is not currently visible.

How do ship-to-ship transfers allow Iranian oil to keep moving, and why are tankers shifting their operations to different waters?

Ship-to-ship transfers keep Iranian crude moving after it has reached offshore storage. One tanker hands cargo to another at sea, allowing the receiving vessel to continue toward a buyer without the original ship returning to Iran. This matters because fresh crude cannot currently cross the blockade line.

UANI observed six crude transfers in Malaysian waters during September. It also reported that the Iran-flagged Hilda I transferred crude south of Zhuhai on September 17, while Happiness I made another transfer south of Hong Kong on September 22. These examples show activity moving beyond Malaysia.

The geographic shifts followed Malaysian enforcement around the Eastern Outside Port Limits. UANI said at least 25 ghost-fleet tankers left after the actions, while about 20 remained. Other vessels moved to northern anchorages in the South China Sea. The relocations reflect growing scrutiny and the search for operating areas less affected by enforcement.

Who are China’s “teapot” refiners, and why are they important buyers of Iranian crude?

China’s “teapot” refiners are independent oil-processing companies, distinct from the country’s largest state-owned refining groups. The nickname refers to their smaller scale and independent position in the market. The article identifies them as buyers of Iranian crude transferred through Malaysia.

Their role appears in UANI’s tracking of September activity. The group estimated that about 9 million barrels of Iranian crude moved through ship-to-ship transfers in Malaysian waters. UANI said those barrels were ultimately destined for Chinese independent refiners, rather than newly exported Iranian crude arriving directly from Persian Gulf terminals.

These buyers matter because they provide an outlet for Iran’s offshore inventory. Their demand helps turn stored barrels into actual deliveries while the blockade blocks new crude exports. If the Malaysian stockpile is depleted and no replacement barrels cross the blockade line, teapots will have less Iranian crude available. The article does not quantify their share of China’s total imports.

How does the normal oil-export supply chain work, from crude production and terminals to tankers and refineries?

A normal oil-export chain begins when producers extract crude and send it by pipeline or other transport to an export terminal. At the terminal, the oil is measured, stored briefly, and loaded onto tankers. Those ships then carry it to another port, where a refinery processes the crude into fuels and other products.

In Iran’s case, the usual chain is breaking near the export stage. UANI said satellite monitoring found no crude loadings at Iranian export terminals during September. It also said vessels have been unable to depart Iranian waters and cross the declared U.S. blockade line. Ship-to-ship transfers now move some previously exported crude between tankers offshore.

The result is a supply chain running on stored inventory. September crude exports fell to zero under UANI’s terminal-loading observation, while total tracked exports averaged only 50,789 barrels per day because LPG and methanol still crossed. As offshore barrels run down, deliveries to refineries will become harder to sustain.

Key Facts:

📌 Offshore stockpiles hold crude aboard tankers outside a country’s waters.

📌 About 9 million Iranian barrels moved through Malaysian waters in September.

📌 Roughly 10 million barrels may remain near Malaysia.

📌 September ship-to-ship transfers used an estimated 9 million Iranian crude barrels.

📌 Roughly 10 million barrels remain near Malaysia.

📌 The offshore reserve is finite and apparently not being replenished.

📌 No new Iranian crude crossed the blockade line after July 14.