Oil production in Iraq has dropped sharply as the country struggles to export crude through the Strait of Hormuz amid the ongoing regional conflict involving Iran, industry sources said on Sunday.
According to three officials familiar with operations in the country’s energy sector, production from Iraq’s main southern oilfields has plunged by about 70 percent, falling to roughly 1.3 million barrels per day. Before the conflict disrupted shipping routes, the fields were producing around 4.3 million barrels per day.
An official from the state-owned Basra Oil Company, which oversees production and export activities in southern Iraq, said storage facilities have already reached their limits. With crude inventories full and exports severely restricted, authorities have been forced to reduce production significantly. The limited oil still being pumped will now be directed to domestic refineries to meet local fuel demand.
The situation has been triggered by the effective closure of the Strait of Hormuz, a narrow but strategically vital passage linking the Persian Gulf with the Gulf of Oman. The route is considered one of the world’s most critical energy corridors, carrying about a fifth of global oil and liquefied natural gas shipments. Disruptions to traffic through the strait have quickly affected exports from Gulf producers, including Iraq.
Exports from Iraq have already dropped sharply. Industry data indicated that shipments on Sunday averaged about 800,000 barrels per day, far below normal levels. Only two tankers were able to load crude during the day, as many vessels have avoided approaching Iraqi terminals due to the security risks and the inability to pass safely through the strait.
Officials directly involved in operations at the southern export terminals warned that the situation could worsen within hours. With no new tankers able to reach the terminals, exports are expected to halt entirely by about 8 p.m. local time if conditions remain unchanged.
The current disruption marks a dramatic shift from just weeks ago. According to a document from Iraq’s oil ministry, exports from the southern oilfields averaged about 3.334 million barrels per day in February. The region accounts for the bulk of Iraq’s oil production and exports, making the decline particularly damaging.
The collapse in output and shipments could have serious economic consequences for the country. Iraq relies heavily on crude sales to fund government spending, with oil revenues accounting for more than 90 percent of national income.
A senior official at the oil ministry described the situation as an unprecedented operational crisis for the country’s energy industry. The official warned that the shutdown of export routes and the resulting production cuts represent the most serious threat Iraq’s oil sector has faced in more than two decades.
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