Iraq has more than halved production at the world’s second largest oilfield after the Islamic Revolutionary Guard Corps declared the Strait of Hormuz closed amid an escalating Iran war.
Rumaila, a 1.2 million-bpd oilfield operated by the state-owned Basra Oil Co., has cut production by 700,000 bpd due to overloaded storage, Reuters reported on Tuesday, citing Iraqi officials. That, after a chocked Strait of Hormuz has slowed the arrival of tankers for crude oil exports. Production at the West Qurna 2 oilfield has also been cut, by 460,000 bpd.
Iraq will be forced to cut its oil production by more than 3 million barrels per day in a few days if oil tankers cannot move freely through the Strait of Hormuz and reach its loading ports, the Iraqi officials said. Already, storage of crude oil has reached critical levels at Iraq’s southern ports, they said.
Strait of Hormuz
Traffic through the Strait of Hormuz was closed for a fourth day on Tuesday. On Monday, an IRGC official said Iran would fire on any ship trying to pass through, according to Iranian media reports. At least three oil tankers in the waterway have been attacked so far.
Just 21 miles across at its narrowest, the Strait of Hormuz carries 20% of global oil and gas supply, everyday. Every major oil-producing nation in the Persian Gulf—Saudi Arabia, Iraq, Kuwait, the UAE, Qatar, Bahrain and Iran itself—must route its exports through this single passage. There is no overland alternative, no bypass canal, no pipelines.
Iran war impact on Crude Oil, Gas
The partial shutdown of the Rumaila oilfield comes a day after Saudi Aramco shut its Ras Tanura oil refinery after an Iranian drone attack at the facility. Elsewhere, Qatar has shut down the world’s largest LNG terminal at Ras Laffan, sending gas prices through the roof in Europe.
