Is Iran’s oil storage nearly full – and will it have to cut production?

The disruption to shipping through the Strait of Hormuz is exposing a structural constraint in global energy markets: alternatives exist, but were they ever designed to fully replace the corridor?

A warning by former Russian president Dmitry Medvedev has crystallised fears among Gulf states that reopening the Strait of Hormuz may be the most Iran-U.S. talks can achieve, falling short of the broader de-escalation they regard as vital.

The petrodollar has been central to sustaining America`s seven-decade-long global hegemony built on a combination of military prowess, strategic alliances, and economic dominance. Since the 1970s, agreements between the United States and key oil-exporting countries, particularly Saudi Arabia, have anchored the international oil trade in the greenback. This arrangement created a structural demand for American currency, allowing the US to finance deficits, keep interest rates low, and wield disproportionate influence over global institutions.

After the United States and Israel attacked Iran, Tehran hit back by restricting ship traffic through the strategically vital Strait of Hormuz and striking energy installations in US‑allied Middle Eastern states. Global supplies of both oil and liquefied natural gas (LNG) have fallen. The current shortfall is more than twice the combined supply deficits of the 1970s oil crisis.  

The US-Israel-Iran war has now entered its second month of reciprocal attacks, alongside Iranian strikes on neighboring Gulf states. Its trajectory remains uncertain, caught between a fragile de-escalation that appears difficult to achieve and a new, unpredictable phase.