Full Breakdown
Iraq's Oil Export Recovery Potential Amid Ongoing Conflict
4/6/2026, 9:36:18 PM
Current Oil Export Situation
Iraq's ability to restore crude oil exports to approximately 3.4 million barrels per day (bpd) hinges on the conclusion of the ongoing Iran war and the reopening of the Strait of Hormuz, according to Bassem Abdul Karim, head of the state-run Basra Oil Company. The Strait of Hormuz is a critical maritime route, accounting for about 20% of global oil and liquefied natural gas (LNG) flows. The conflict has severely impacted Iraq, which has experienced the largest decline in oil revenue among Gulf producers due to the effective closure of this vital shipping lane.
Impact of the Conflict
Since the U.S.-Israeli attacks on Iran at the end of February 2026, Iraqi oil production has plummeted by approximately 80%, dropping to around 800,000 bpd. Prior to the conflict, Iraq's production was around 4.3 million bpd. The Rumaila field's output fell from about 1.35 million bpd to around 400,000 bpd, while the Zubair field's production decreased from 340,000 bpd to approximately 300,000 bpd. The Basra Oil Company has been operating several smaller fields at limited levels to maintain associated gas production for domestic power generation.
Domestic Supply and Refinery Demand
To meet domestic refinery demands, the Basra Oil Company is currently supplying around 400,000 bpd of crude to northern Iraq, which includes 150,000 bpd transported by truck and 250,000 bpd via pipeline. The total refinery demand is estimated at around 500,000 bpd, with production from the northern Kirkuk fields contributing roughly 380,000 bpd.
Challenges and Security Concerns
The ongoing conflict has also led to security challenges for oil operations. Abdul Karim noted that drone attacks on oil facilities have caused significant disruptions, with recent strikes targeting the Rumaila oilfield resulting in injuries to three Iraqi workers. The attacks have primarily affected sites operated by foreign oilfield services companies, including Schlumberger and Baker Hughes.
Official Statements & Responses
Abdul Karim emphasized that Iran has only provided verbal assurances regarding the passage of Iraqi tankers through the Strait of Hormuz, stating, “We have not received any formal documents regarding permission for Iraqi tankers to pass.” Meanwhile, U.S. President Donald Trump has issued threats against Tehran, warning of severe consequences unless an agreement is reached to facilitate traffic through the Strait.
Criticism & Opposition
Critics have raised concerns about the reliance on verbal agreements from Iran, highlighting the potential risks involved in resuming oil exports without formal guarantees. The ongoing conflict and security threats further complicate Iraq's efforts to stabilize its oil production and export capabilities.
What's Next
The future of Iraq's oil exports remains uncertain, contingent on the resolution of the conflict and the reopening of the Strait of Hormuz. The Basra Oil Company is poised to increase production rapidly if conditions allow, but the ongoing security challenges and geopolitical tensions continue to pose significant obstacles.
