Iraqi Oil Production Collapses 70% — Hormuz Blockade Cuts Output to 1.3 Million Barrels per Day

Three industry sources told Reuters that Iraqi oil production from its main southern oilfields had collapsed by 70 percent, falling from approximately 4.3 million barrels per day before the war to just 1.3 million barrels per day. The near-total collapse in production is a direct consequence of the Hormuz closure: Iraqi oil — primarily from the southern Basra fields — is exported almost exclusively through the Strait of Hormuz, which has been effectively closed since the war began on February 28. With Hormuz blocked by the Iran war, Iraqi tankers cannot load, storage is filling up, and production has had to be curtailed. The economic consequences for Iraq are severe. Before the war, oil revenues accounted for approximately 90% of the Iraqi government's budget. A 70% production collapse, sustained over weeks, would cause a fiscal emergency of the first order — threatening civil service salaries, infrastructure spending, and social stability in a country that has only recently achieved political stabilisation after years of conflict. Iraq produces approximately 10% of global OPEC+ supply. The 3 million barrel per day shortfall from Iraq alone — combined with the near-complete halt of Iranian exports and significant reduction in Gulf shipping — represents a structural supply shock to global oil markets that dwarfs any previous peacetime disruption.