Iraqi oil production from its main southern oilfields has fallen by 70% to just 1.3 million barrels per day as the country is unable to export oil via the Strait of Hormuz due to the Iran war, three industry sources said on Sunday.
Production from the fields stood at around 4.3 million bpd before the war.
“Crude storage has reached maximum capacity and the remaining output after the major cut will be used to supply the country’s refineries,” said an official with the state-run Basra Oil Company (BOC), which manages production and export operations from the southern fields.
The Strait of Hormuz, a narrow, strategically vital waterway between the Persian Gulf and the Gulf of Oman, is one of the world’s key oil transit chokepoints, carrying roughly a fifth of global oil and liquefied natural gas flows.
The OPEC member’s exports also fell sharply to an average of around 800,000 barrels per day on Sunday, with only two tankers loading because vessels cannot move freely through the strait to Iraq’s southern terminals, the source said.
With no new tankers able to reach Iraq’s southern terminals, exports from there are expected to halt completely at around 8 p.m. local time (1700 GMT), said two oil officials with direct knowledge of terminal operations.
Iraq’s oil exports from the southern oilfields stood at 3.334 million barrels per day in February, an oil ministry document showed.
A drop in Iraq’s oil production and exports is set to strain the country’s already fragile finances, as the state relies on crude sales for nearly all public spending and more than 90% of its income.
“This is the most serious operational threat Iraq has faced in more than 20 years,” a senior Iraqi oil ministry official said.
(Reporting by Ahmed Rasheed in Baghdad and Aref Mohammed in Basra, Editing by Louise Heavens, Alexandra Hudson)