Iran has raised gasoline prices starting Tuesday (local time) as the country's economic difficulties deepen. Iranians fill up at a gas station in Tehran. [EPA]
Iran has raised gasoline prices starting Tuesday (local time) as the country's economic difficulties deepen. Iranians fill up at a gas station in Tehran. [EPA]

The US maritime blockade aimed at cutting off Iran's oil revenue appears to be working.

The Wall Street Journal reported Monday (local time), citing shipping data firm Kpler, that no Iranian crude oil has crossed the blockade line for export since the United States reimposed the blockade in July.

Iran loaded 255,000 barrels per day of crude onto vessels in the Persian Gulf last month, but the cargo remains stranded at sea, unable to breach the blockade. Some oil moved outside the blockade line when the US temporarily lifted restrictions after signing an end-of-war MOU with Iran in June is still available, but supplies are nearly exhausted. Iran's remaining crude stockpile outside the blockade line stands at roughly 29 million barrels.

Kpler estimated that Iran is selling the pre-loaded oil to China and other buyers at around 1 million barrels per day, and that those reserves will run out by mid-October.

Collecting payment for oil Iran has already sold may also prove difficult. The United States has pledged an "economic isolation campaign" of maximum pressure on Iran and warned that it will impose secondary sanctions on any institution or government that does business with Tehran — including banks.

Iran's national economy depends heavily on crude oil exports. Oil sales fund roughly one-third of the state budget, and the military — including the Islamic Revolutionary Guard Corps — also relies on oil revenue.

With exports now blocked, reports from inside the country describe an economy on the verge of collapse. The Iranian rial has plunged to its worst level on record. Inflation has surged into triple digits as import prices climb, and while the official inflation rate already exceeds 80 percent, residents say the reality on the ground is far worse.

The IMF projects Iran's economy will contract 5.4 percent this year — the worst performance since the 1980s.

Even so, experts doubt that economic pressure alone will force Iran to capitulate or make concessions in its standoff with the United States. They warn that hardliners inside Iran are more likely to respond with defiance.

"US sanctions will have a significant impact on ordinary Iranian households, but I am skeptical about whether they will cause Iran to yield at the negotiating table," said Ellie Geranmayeh, an Iran expert at the European Council on Foreign Relations. "The Iranian regime is more likely to resist."

Hamad Hussain, an economist at Capital Economics, said the outcome "depends a great deal on how much economic pain the Iranian regime is willing to endure in pursuit of its military and geopolitical objectives."


kate01@heraldcorp.com