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Iraq oil production and economic impact of Hormuz crisis

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2026-10-04 13:33 UTC → 2026-10-04 21:51 UTC · added ~~removed~~

Iraq is adjusting its oil production and export strategies in response to a crisis in the Strait of Hormuz caused by US-Israel strikes on Iran. Initially, reports indicated that Iraqi oil exports had dropped from 3.4 million barrels per day to between 1.5 and 1.7 million barrels per day due to maritime trade restrictions. In response, Prime Minister Ali al-Zaidi ordered oil companies to operate 24 hours a day to boost crude production and develop energy infrastructure. By August, exports rose to approximately 2.34 million barrels per day, aided by price discounts and transit permissions from Tehran. In September 2026, the Iraqi Ministry of Oil clarified that while media reports claimed exports reached 4 million barrels per day, that figure was recorded for only a single day. The Ministry confirmed the average daily export rate through September 21 was approximately 2.6 million barrels per day. As of late September, the economic impact has intensified. Prime Minister al-Zaidi reported that Iraq has lost approximately $60 billion in oil revenue since the conflict began. With 90% of the state budget dependent on oil income, the government is struggling to pay salaries, triggering protests in Baghdad. Additionally, nearly 90% of oil exports through Gulf nations have ceased. To diversify export paths, Iraq has signed a one-year agreement with Turkey to export approximately 750,000 barrels of oil per day via the Ceyhan pipeline. In early October 2026, the Iraqi Oil Tankers Company successfully transported two million barrels of crude using a Very Large Crude Carrier (VLCC) outside the Strait of Hormuz. ~~This~~ Director General Ali Qais Abdul Jabbar described the operation ~~marks~~ as the first of its kind in decades, marking a strategic shift from the traditional Free on Board (FOB) ~~delivery~~ model ~~at Basra~~ toward a direct delivery system.

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