Crude oil production from Iraq’s southern fields has dropped by 70% since the start of the U.S. and Israeli war on Iran, with the average daily production at 1.3 million barrels, compared with 4.3 million barrels daily before the war began.
“Crude storage has reached maximum capacity, and the remaining output after the major cut will be used to supply the country’s refineries,” an official from Basra Oil Company told Reuters. The company is the state-owned entity that markets Iraq’s southern oil, which accounts for most of its production.
Iraq was the first major producer to resort to production cuts because of tanker traffic disruption in the Strait of Hormuz. The cuts began last week, with warnings from analysts that other producers would follow suit when their storage reaches its limits as well. Indeed, Kuwait and the UAE were the next to announce oil production cuts in response to the paralysis of traffic in the Strait.
Iraq is still loading crude for export, but nowhere near previous rates, the Reuters report noted. On Sunday, only two vessels were loaded at Iraq’s terminals in the south, each with about 2 million barrels. One of the vessels is Hong Kong-flagged Cospearl Lake, and the other is a China-flagged VLCC named Yuan Hua Hu. According to Marine Traffic, both vessels are still in the Persian Gulf.
Reuters reports that Iraq’s average daily oil exports have plummeted from over 3.33 million barrels daily to just 800,000 barrels daily as of Sunday. “This is the most serious operational threat Iraq has faced in more than 20 years,” the publication cited an Iraqi oil ministry official.
The oil and gas supply disruption in the Gulf resulting from the U.S. and Israeli war with Iran has pushed Brent crude over $116 per barrel earlier today, with WTI also reaching that price level, before both retreated to below $110 a barrel. Meanwhile, Middle Eastern Murban has soared to over $120 per barrel.
By Irina Slav for Oilprice.com
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