Hormuz blocked, storage tanks saturated, Iraq's daily production cut could reach 3 million barrels.

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Iraq has begun shutting down production at its largest oil field as crude oil storage tanks are reaching capacity. If the blockade of the Strait of Hormuz continues, the country's daily output loss could reach 3 million barrels, which is two-thirds of its total production capacity.

According to CCTV News, on the 3rd local time, the Iraqi Ministry of Oil issued a statement saying that due to the closure of the Strait of Hormuz causing interruptions in international shipping and hindering oil tankers from entering the Persian Gulf, there is a shortage of oil tankers in Iraq's southern ports. The southern section of Iraq’s giant Rumaila oil field has announced a suspension of production. In addition, due to regional tensions, the Kurdistan autonomous region in northern Iraq announced on the 3rd the suspension of oil exports from Kurdistan to Turkey's Ceyhan port.

The impact of this crisis is no longer limited to Iraq. Retaliatory strikes by Iran across the Middle East have affected multiple energy infrastructure sites. Saudi Arabia has closed its largest refinery, while Qatar has suspended production at the world's largest liquefied natural gas export facility after drone attacks. The substantial blockade of the Strait of Hormuz is pushing the energy market towards comprehensive tension.

Storage tanks near full, forced to reduce production

The Rumaila oil field, jointly operated by BP, the Iraqi government, and China National Petroleum Corporation, is one of the largest oil fields in the world. BP data shows the field’s daily output exceeded 1.4 million barrels in 2024, up from about 1.2 million barrels at the start of last year. The West Qurna 2 oil field produces nearly 500,000 barrels per day.

When the Strait of Hormuz becomes practically impassable and the number of ships entering the Persian Gulf sharply decreases, onshore storage tanks in oil-producing countries will quickly fill up, making production cuts the only option. The Strait of Hormuz is a vital route for Middle Eastern oil exports to the global market. This round of Iranian military action has brought this waterway almost to a halt.

Kurdistan exports also halted

Iraq’s export difficulties are not limited to its southern oil fields. According to Bloomberg, citing informed sources, the semi-autonomous Kurdistan region has suspended crude oil exports to Turkey’s Ceyhan port, effectively shutting down this northern export route as well.

The pipeline route from Kurdistan through Turkey was previously considered an alternative to bypass the Strait of Hormuz. Now that this channel is also blocked, it means nearly all major export routes for Iraq are hindered and the country's crude oil shipments have almost come to a complete standstill.

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