Iraq Oil Production Plummets 70% Amid Strait of Hormuz Shipping Disruptions
Iraq’s oil production has taken a severe hit, dropping by roughly 70% after exports through the strategic Strait of Hormuz were disrupted amid ongoing conflict in the Middle East. According to Reuters, officials and industry sources revealed that production from Iraq’s southern oilfields fell to about 1.3 million barrels per day, down sharply from pre-crisis levels of 4.3 million barrels per day.
Industry insiders say the dramatic decline is largely due to storage limits and bottlenecks in exporting crude. “Crude storage has reached maximum capacity, and the remaining output will now feed domestic refineries,” explained an official from the state-run Basra Oil Company, which oversees production and exports from Iraq’s southern fields. A senior oil ministry official described the situation as the most serious operational challenge Iraq has faced in more than two decades.
Exports have also slowed drastically, with only two oil tankers able to load crude due to restrictions in the Strait of Hormuz. Shipping data shows the Cospearl Lake and Yuan Hua Hu each carried roughly 2 million barrels before leaving Iraq’s terminals, leaving additional vessels stranded. Given that oil revenues account for over 90% of Iraq’s government income, this disruption threatens both the economy and public spending.
The crisis is closely tied to heightened tensions in the Middle East, following the war involving the United States, Israel, and Iran. Insurance companies have suspended war-risk coverage for vessels in the Gulf, leaving many ships unwilling to transit the strait. While the U.S. Navy has suggested escorting commercial vessels to maintain oil flows, Iranian authorities maintain that the Strait of Hormuz remains open despite the conflict.
Regional attacks on energy infrastructure have compounded the problem, with strikes affecting oil facilities in Iran, Saudi Arabia, and Qatar, among others. Experts warn that continued disruptions in the Gulf could impact global energy markets, putting pressure on both producers and consumers worldwide. Iraq, a major OPEC member, remains at the center of this unfolding energy crisis.
source: nairametrics