[Special Report] Export Restrictions Cause 80% Drop in Production at Southern Iraq Oil Fields

Export Blocked: Oil Production in Southern Iraq Plummets by 80%

Yang Shuyi

Iraqi energy officials said on the 25th that due to the de facto blockade of the Strait of Hormuz, Iraq is unable to export crude oil through the strait, leading to a storage space crisis and forcing the country to cut oil production, resulting in an 80% drop in output from its main southern oil fields.

Reuters reported, citing three Iraqi energy officials, that production from Iraq’s main southern oil fields has decreased by approximately 80%, down to an average of about 800,000 barrels per day. Before the U.S. and Israel launched strikes against Iran, the output from these fields was about 4.3 million barrels per day. Earlier this month, industry insiders revealed that the output from these fields had already dropped by about 70%, to around 1.3 million barrels per day.

These officials stated that Iraq decided to continue reducing oil production starting from the 24th and has sent notices of production cuts to relevant energy companies. Iraq has requested that BP reduce the daily output of the Rumaila oil field in Basra province from about 450,000 barrels to about 350,000 barrels; it has also asked Italy’s Eni to cut the daily output of the Zubair oil field in Basra province from 330,000 barrels to 260,000 barrels. Additionally, according to insiders, Iraq has significantly reduced the output of several state-owned oil fields.

About 90% of Iraq’s fiscal revenue comes from crude oil exports, primarily from the southern oil-producing areas. Before the outbreak of conflict in Iran, Iraq was exporting about 3.5 million barrels of crude oil per day, mainly through the Strait of Hormuz.

The Iraqi side stated last week that it has “opened up” another route for crude oil exports: a land pipeline connecting the northern Kurdish region of the country to the southern Turkish port of Ceyhan, transporting crude oil produced from the northern Kirkuk oil fields to the Mediterranean. The Iraqi state-owned North Oil Company said the initial capacity is 250,000 barrels per day.

Iraqi energy officials warned that if the shipping situation in the Strait of Hormuz does not improve, further production cuts may be announced in the coming days.

However, according to a post on social media X by the Iranian Consulate General in Mumbai on the 26th, Iranian Foreign Minister Amir-Abdollahian stated that Iran “allows friendly countries (ships) to pass through the Strait of Hormuz,” including Iraq. (End) (Xinhua Special Report)