Iraq has officially declared a state of force majeure across all oil fields operated by foreign companies and reduced the Basra Oil Company's production from 3.3 million to 900,000 barrels per day. The decision follows the complete halt of southern exports due to the closure of the Strait of Hormuz.
In a letter dated March 17, reviewed by "Mada Al-Rafidain News", the Iraqi Oil Ministry stated that navigation through the strait has been severely disrupted by unprecedented military actions, causing crude storage facilities to reach their maximum capacity.
The ministry announced a complete halt in production as a precautionary measure starting March 2026, with no compensation mandated per contract terms. This is due to the impossibility for international partners to nominate tankers to receive export oil.
Iraqi Oil Minister Hayan Abdel-Ghani confirmed in a statement on Friday that the currently produced quantities will be entirely redirected to operate domestic refineries. The ministry has called foreign companies for urgent talks to agree on essential operations and costs under these force majeure conditions.
These developments coincide with global oil prices hitting a four-year high. The production and export cuts are expected to severely strain Iraq's fragile public finances, as the state relies on crude oil sales for over 90% of its total revenue.
The crisis unfolds amid an escalating three-week-old war involving the United States, Israel, and Iran, which has expanded into neighboring countries and regional military installations.
