U.S. Navy blockade slashes Iran oil exports as Trump shifts to economic

Iranian crude oil exports have plunged in August as the U.S. relies on economic pressure through its naval blockade, rather than military strikes, to coerce Tehran into a deal to fully reopen the Strait of Hormuz.

Tehran has loaded about 260,000 barrels per day for export at its ports so far this month, a decline of more than 80% compared with 1.7 million bpd in August 2025, according to data shared Thursday by the trade intelligence firm Kpler.

President Donald Trump reimposed the blockade on July 14 in retaliation for Iran attacking oil tankers transiting the Hormuz Strait. Tehran’s crude loadings are down about 70% in August from 893,000 bpd last month.

Oil exports are a crucial source of revenue for Iran. The Trump administration believes Iran will eventually run out of money and have to capitulate, said Bob McNally, president of Rapidan Energy.

The blockade has been “very effective,” said Matt Smith, director of commodity research at Kpler. It has “walloped Iran’s crude export loadings,” he said. The crude that Tehran is able to load on tankers probably doesn’t make it past the blockade, Smith added.

Tehran has about 20 million barrels of crude oil on tankers in Asia waiting to discharge to China, the main recipient of Iranian oil, that is a source of revenue, Smith said. Iran can probably store another 20 million barrels onshore before it runs out of space and its production is affected, he said.

The U.S. military has redirected 75 commercial ships, disabled three vessels and boarded two as of Thursday to enforce compliance with the blockade, Central Command said in a social media post.

A campaign of economic warfare

Trump has shifted to a campaign of economic warfare against Iran, after a dozen waves of airstrikes in July failed to force Tehran to abandon its claim to control Hormuz. Treasury Secretary Scott Bessent on Monday announced a plan to sever the Islamic Republic’s financial connections around the world.

“We have the blockade and we are going to have the toughest sanctions in history,” Bessent told CNBC last Thursday. “It worked in Venezuela once we put up the blockade. It is working in Cuba right now and it is going to work in Iran, and we are going to collapse this regime.”

But the Treasury secretary’s launch of “Operation Economic Outcast” against Iran on Monday was light on specifics. The campaign represents a major departure in U.S. policy, said Jeremy Paner, who worked on Iran sanctions at the Treasury’s Office of Foreign Assets Control from 2007 to 2013.

“Instead of saying we’re going limit the revenue, they’re saying we’re going to completely economically isolate Iran,” Paner said. “That had never been the goal of the U.S economic sanctions. Bessent saying that is a big deal.”

But Iran has remained defiant, rejecting U.S. demands and calling on the Trump administration to accept its conditions for Hormuz to reopen. Two tankers have come under attack this week in Hormuz and near Oman. Meanwhile, Tehran is negotiating with…