The amount of oil stored at sea — a vital buffer for markets — is running down fast, as supply from the Persian Gulf remains constrained for a third week and buyers are forced to find quick alternatives.

It’s a hoard that could shrink even more swiftly if the U.S. advances a proposal to remove sanctions on seaborne Iranian barrels, made by Treasury Secretary Scott Bessent on March 19.

Crude oil and condensate in floating storage has been falling by 1.8 million barrels a day since the war began, one of the fastest rates in years. It now stands at around 78 million barrels, according to data intelligence firm Vortexa — and around a third of what’s left is from Iran. 

Oil in floating storage rose quickly late last year, peaking at more than 140 million barrels at the end of November. That was thanks to U.S. pressure on India to avoid Russian oil and to an acceleration in Iranian exports as the geopolitical situation deteriorated. At the same time, Chinese independent buyers were constrained by import quotas.

The almost halving of those stockpiles since then may have helped cushion the blow from what the International Energy Agency has called the biggest oil supply disruption in history. But with an ever-thinning buffer, price gains could accelerate, absent a rapid reopening of the Strait of Hormuz. The narrow waterway has now been all but closed for three weeks, with only a trickle of Iranian and Chinese tankers transiting.

With pressure increasing on the U.S. administration to contain prices, Washington has had an eye on widening access to seaborne barrels — first with a waiver for Russian oil, and now with a potential green light for some Iranian crude too.

Bessent estimated there are 140 million barrels of Iranian oil at sea now, without providing detail. That figure likely refers to oil on water, which includes cargoes in transit which may already be booked, and may not reflect actual availability. 

Measuring the exact amount of oil that is stored in tankers on the water and available is not straightforward. Floating storage tends to refer to oil held on vessels that are idle for at least a week, and so does not include ships in motion that may hold unsold cargoes. Oil on water counts all tankers but could include some volumes that already have buyers and so are not actually available. 

Neither necessarily captures all dark-fleet activity.

Goldman Sachs Group Inc. estimated there were 131 million barrels of Russian oil on water and 105 million of Iranian crude — enough to eventually offset just two weeks of Strait of Hormuz disrupted flows.

The U.S. plan to turn Iranian floating storage into prompt supply will require finding buyers. For years, most Iranian oil has been bought at steep discounts by China’s independent refiners, or “teapots.” For non-Chinese buyers to break into the trade will require finding counterparties and organizing payments, while other restrictions remain in place.

“The Islamic Revolutionary Guard Corps could make a good fortune though if all cargoes are sold as normal barrels,” said Emma Li, lead China market analyst at Vortexa Ltd. However, “mainstream importers will still be constrained by compliance, financing and logistical considerations, particularly if the waiver is seen as temporary or uncertain.”