If the Strait of Hormuz is closed for another 3 days, 3.3 million barrels of crude oil in the Middle East will be forced to stop production, with Iraq bearing the brunt.
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The threat of the Strait of Hormuz being blocked is rapidly turning into a physical supply crisis at a speed far exceeding previous expectations.
Natasha Kaneva, chief commodities strategist at JPMorgan, pointed out in her latest report that due to the uneven storage tank capacities among Middle Eastern oil-producing countries, the process of forced crude oil production shutdown will accelerate significantly within the next three days—by then, the cumulative shutdown volume will approach 3.3 million barrels per day, far exceeding previous market contingency plans.
The latest calculations by JPMorgan show that Iraq’s storage tank capacity will last about two days, Kuwait about 13 days, and once the limit is reached, forced production cuts will be necessary. It is worth noting that these estimates are relatively conservative and do not include some product storage points inside the Persian Gulf or deployable idle large oil tankers.
If the blockade continues, JPMorgan predicts that by the eighth day (about three days from now), the scale of forced shutdown will reach about 3.3 million barrels per day; by the fifteenth day, it will rise to 3.8 million barrels per day; and by the eighteenth day further expand to 4.7 million barrels per day. These figures cover only crude oil, excluding refined products.
Brent crude prices were pushed to near $85 per barrel on Tuesday, and an oil tanker near the coast of Kuwait exploded and caused an oil spill, further tightening market sentiment.
Storage Tank Capacity Threat: Warning Upgraded from "25 Days" to "3 Days"
Earlier this week, based on initial data showing plummeting transit volume through the strait, JPMorgan estimated that Middle Eastern oil-producing countries had about a 25-day buffer window; at that time, this judgment was viewed as a key risk indicator by the market. However, subsequent checks of the actual storage abilities of each country quickly rendered this conclusion invalid.
JPMorgan stated that Iraq’s situation is particularly urgent. The country has already cut production by about 1.5 million barrels per day, covering the Rumaila oil field (cut by about 700,000 barrels/day), West Qurna 2 (cut by about 460,000 barrels/day), and the Maysan oil field (cut by about 325,000 barrels/day).
Saudi Arabia is also under pressure. As of March 1, storage space at the Ju’aymah terminal on the east coast has quickly narrowed, and four of the six storage tanks at the Ras Tanura refinery have filled up; this refinery was attacked by Iran earlier this week and halted production.
The crux of the issue is the severe inequality in storage capacity. Some countries have ample storage facilities, while others have almost no surplus at all. The overall average of 25 days thus masks the more urgent pressure faced by certain countries.
Antoine Halff, co-founder and chief analyst at geopolitical analysis firm Kayrros, pointed out that "Not all storage capacity is equally important. Certain tanks are critical because of their location relative to oil fields or loading facilities. Storage facilities are not interconnected; there are significant efficiency losses within the system."
Transport Disruption Continues, New Shocks to Infrastructure
Strait passage remains nearly at a standstill. Except for Iranian vessels, there is no confirmed record of any crude oil tanker successfully transiting the strait, though some ships are suspected to have passed through with their transponders turned off. Reportedly, the “Pola,” a Suez-type tanker with a load capacity of about 1 million barrels, shut down its vessel signal after entering the strait at 2am local time. Only 6 to 12 Very Large Crude Carriers (VLCCs) reportedly remain available for hire, and the options for allocating maritime storage are extremely limited.
Meanwhile, Middle Eastern energy infrastructure keeps taking hits. A fire broke out at UAE’s Fujairah port after a drone was intercepted; several refineries and storage facilities are concentrated at this port. Bloomberg commodity analysts warn that if any fully loaded tanker in the Persian Gulf is attacked, even with risk of spills, oil-producing countries may be forced to halt loading, which would sharply accelerate the process of forced production shutdown.
East-West Pipeline Offers Limited Buffer; Trump Administration May Intervene for Passage Security
In this deteriorating context, some signals of relief have begun to emerge. According to Bloomberg, Saudi Arabia is working to re-activate the East-West oil pipeline to reroute crude exports via the Red Sea, bypassing the Strait of Hormuz. Saudi Aramco data shows the pipeline’s design capacity is about 7 million barrels per day, though actual usage before the conflict was less than half that. In theory, about 5 million barrels per day of additional capacity is available, and the four main berths at Yanbu port have matching loading capability.
However, analysts broadly believe that even at full utilization, the pipeline cannot effectively make up the supply shortfall caused by a real blockade of Hormuz.
Meanwhile, there is a possibility of intervention by the Trump administration—including providing naval escorts for ships transiting the strait, and offering government-backed war risk insurance to simultaneously reduce both practical and financial risks. But logistical obstacles remain. JPMorgan’s analysis emphasizes that speed and decisiveness are critical—if storage capacity keeps shrinking, any delay will rapidly lead to irreversible forced production shutdowns.
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