Iraq Halts Oil Production From Foreign Fields
1- 21.03.2026, 8:43
- 1,794
Because of the blockade of the Strait of Hormuz.
Iraq halts oil production at foreign fields due to the blockade of the Strait of Hormuz.
According to Reuters.
Iraq has officially declared a state of force majeure on all oil fields being developed by foreign companies.
According to a March 17 letter from Iraq's Oil Ministry seen by Reuters, unprecedented military activity in the region has paralyzed traffic through the Strait of Hormuz, a key point through which about 20 percent of the world's oil and liquefied natural gas supplies pass. This has brought most of the country's oil exports to a virtual standstill.
Critical Storage and Production Situation
Because of the inability to move crude out, Iraq's oil storage capacity has reached its limit.
The document notes that international partners have been unable to nominate tankers to transport oil, despite the readiness of the state-owned company SOMO to load shipments.
Impact on the oil industry
Total shutdown of production: the Ministry ordered a halt to production in the affected concession areas. The force majeure clause stipulates a halt in production without compensation to the companies, which are stipulated in the contracts.
Volume collapse: Oil Minister Hayan Abdel-Ghani confirmed that Basra Oil Company's production has dropped from 3.3 million to only 900,000 bpd (the balance is used only for internal refinery needs).
The halt in exports poses a critical threat to Iraq's finances, as oil sales provide more than 90% of government revenues.
The situation is unfolding against the backdrop of a three-week war between the US and Israel on one side and Iran on the other. The conflict has already gone beyond Iranian territory, with Tehran launching strikes against Israel and the Gulf Arab states where US military facilities are located. In turn, Israel is attacking Hezbollah facilities in Lebanon.
With these developments as a backdrop, global oil prices have reached the highest level in the past four years.
Iraq has called on foreign oil companies for urgent talks to coordinate staff work and expenses under force majeure, adding that the restriction regime will be reviewed depending on developments in the region.
Reminder that after the US and Israeli strikes on Iran in late February, Iran began attacking commercial ships and threatening to close the Strait of Hormuz.
Last year, about 13 million barrels, or about 31% of sea supplies, passed through it daily. The strait is a major transportation artery for Arab monarchies, Iraq and Iran.
In a matter of weeks, more than 20 merchant ships have been attacked or damaged, and some crews have died or disappeared. Thus, most shipping companies have stopped voyages through the strait, and tanker traffic has almost come to a halt.
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