Iran war news: Iraq oil production collapses as Strait of Hormuz remians blocked

Iraq’s oil production from its main oil fields in the south has fallen by 70 percent to just 1.3 million barrels per day due to its inability to export oil through the Strait of Hormuz due to the Iran war.

Before the war, production from the fields was around 4.3 million barrels per day.

“Crude storage has reached maximum capacity and remaining production after the major curtailment will be used to supply the country’s refineries,” said an official at the state-run Basra Oil Company, which manages production and export operations from fields in the south.

The Strait of Hormuz is one of the world’s most important oil chokepoints, carrying roughly one-fifth of global flows of oil and liquefied natural gas.

The source said the OPEC member’s exports also fell sharply on Sunday, falling to an average of around 800,000 barrels per day, and only two tankers were loaded because ships could not move freely through the strait to Iraq’s southern terminals.

Two tankers, Cospearl Lake and Yuan Hua Hu, had each completed loading about two million barrels of crude oil, and the flow of oil from Iraq’s southern export terminals was halted due to no new ships arriving, three oil officials and a shipping agent told Reuters.

Oil exports from Iraq’s southern oil fields totaled 3.334 million barrels per day in February, according to an oil ministry document.

Since nearly all of the state’s public spending and more than 90 percent of its revenue depend on crude oil sales, the decline in Iraq’s oil production and exports will strain the country’s already fragile financial situation.

“This is the most serious operational threat Iraq has faced in more than 20 years,” said a senior Iraqi oil ministry official.