Baghdad, Iraq – Oil production from Iraq’s main southern oilfields has dropped by approximately 70% after the country was unable to export crude through the Strait of Hormuz.
The development comes amid ongoing military conflict involving Iran, the United States, and Israel.
Okay News reports that Reuters disclosed the production decline on Sunday, citing three industry sources and officials familiar with operations at Iraq’s southern oil facilities. Production from the fields has fallen to around 1.3 million barrels per day, down sharply from roughly 4.3 million barrels per day before the conflict disrupted maritime movements through the critical oil transit route.
Officials stated that the sharp decline in output is largely due to storage constraints and export bottlenecks. The disruption in shipping through the Strait of Hormuz has created maximum capacity at crude storage facilities.
An official with the state-run Basra Oil Company explained that remaining output after the major cut will be used to supply the country’s refineries. A senior official at Iraq’s oil ministry warned that the situation represents the most serious operational threat Iraq has faced in more than 20 years.
Iraq is one of the world’s largest oil producers and a member of the Organization of the Petroleum Exporting Countries. Much of its crude output comes from large oilfields in the country’s south.
Before the latest disruption, production from those fields averaged about 4.3 million barrels per day. A significant portion was exported through southern terminals connected to global shipping routes.
Exports dropped sharply to around 800,000 barrels per day on Sunday. Only two oil tankers were able to load crude due to restrictions on vessel movement through the Strait of Hormuz.
Shipping data showed that two vessels, the Cospearl Lake and Yuan Hua Hu, each loaded roughly 2 million barrels of crude before leaving the terminals. No additional tankers arrived afterward, effectively halting further oil flows from Iraq’s southern export facilities.
Oil exports are critical to Iraq’s economy, accounting for more than 90% of government revenue and financing most public spending. The disruption highlights the country’s heavy reliance on the Strait of Hormuz, a narrow maritime passage connecting the Persian Gulf to global markets.
The disruption in shipping activity comes amid heightened tensions in the Middle East. Several international marine insurers recently suspended war-risk coverage for ships operating in parts of the Gulf and nearby waters.
Attacks on vessels and escalating military activity increased risks for shipping companies. The lack of insurance coverage and security concerns has made many shipowners reluctant to sail through the area.
Dozens of vessels are waiting near the strait, slowing the movement of oil and liquefied natural gas shipments.
On March 3, President Donald Trump signaled that the United States Navy may escort vessels through the Strait of Hormuz to prevent disruptions in global energy supplies.
However, Iranian authorities have denied claims that they formally shut down the Strait of Hormuz, saying the route remains open despite heightened tensions.
The Strait of Hormuz carries roughly 20% of global oil and liquefied natural gas supplies. The ongoing conflict has also led to attacks on energy infrastructure across the Middle East.
On Saturday, Israeli forces struck oil storage facilities in Tehran, marking the first reported attack on Iran’s oil infrastructure since the war began.
Saudi Arabia’s state oil giant was forced to halt operations at a major refinery in the Eastern Province after a drone strike disrupted facilities capable of processing more than 500,000 barrels of crude per day.
In Qatar, authorities temporarily stopped downstream production after energy facilities in Ras Laffan Industrial City and Mesaieed Industrial City were hit.
The attacks have affected energy infrastructure across several Gulf countries, including the United Arab Emirates, Kuwait, Qatar, Bahrain, and Oman. Iran has since indicated that it would avoid targeting neighboring countries unless attacks against it originate from their territories.
