Iraq cuts crude production as Strait of Hormuz closure blocks exports

2026-03-04 - 09:32

Iraq has been forced to reduce its crude oil production as exports grind to a halt following Iran's closure of the Strait of Hormuz, the Iraqi Ministry of Oil announced Tuesday evening. The strategic waterway's shutdown, declared Monday by Iran's Islamic Revolutionary Guard Corps (IRGC), has severed a critical export route for Iraqi oil and multiple Gulf producers amid the escalating US-Israeli conflict with Tehran. Domestic supply secured The Iraqi Oil Ministry moved quickly to reassure citizens that the production reduction will not affect domestic energy needs. In a statement, the ministry confirmed that all refineries in the southern, central and northern regions "are operating continuously at full capacity to produce various petroleum products, ensuring sufficient supply for daily local use and storing any surplus." The reduction in crude output, the ministry explained, will not impact refinery operations or the continued production of petroleum derivatives required to meet domestic oil demands. Strait of Hormuz blocked Iran's IRGC announced Monday that the Strait of Hormuz has been closed to transit, warning that vessels attempting to cross would be attacked in retaliation for US-Israeli strikes on Iran that began Saturday. The waterway, located at the mouth of the Persian Gulf, serves as the conduit for Middle Eastern oil and LNG exports to global markets via the Arabian Sea and Indian Ocean. Major producers including Saudi Arabia, the UAE, Kuwait, Iraq and Qatar rely heavily on this passage, while European markets and major Asian economies such as China, India, Japan and South Korea depend on it for energy imports. Regional conflict expands The Strait's closure comes as the US-Israeli military campaign against Iran has killed nearly 800 people, according to Iranian figures, including Supreme Leader Ayatollah Ali Khamenei and dozens of senior commanders. Tehran has retaliated with drone and missile strikes targeting Israel and Gulf countries hosting US assets, drawing regional states deeper into a conflict that now directly threatens global energy supplies. For Iraq, which depends on oil exports for the vast majority of government revenue, the prolonged closure could have severe economic consequences beyond immediate production cuts.