Iraq’s Oil Hub Slows to a Crawl as Strait of Hormuz Shutdown Strangles Exports

01 April 2026, Iraq, Erbil: Smoke rises from a motor oil depot on the outskirts of Erbil, after it was hit by a drone attack. Photo: Ismael Adnan/dpa
01 April 2026, Iraq, Erbil: Smoke rises from a motor oil depot on the outskirts of Erbil, after it was hit by a drone attack. Photo: Ismael Adnan/dpa
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Iraq’s Oil Hub Slows to a Crawl as Strait of Hormuz Shutdown Strangles Exports

01 April 2026, Iraq, Erbil: Smoke rises from a motor oil depot on the outskirts of Erbil, after it was hit by a drone attack. Photo: Ismael Adnan/dpa
01 April 2026, Iraq, Erbil: Smoke rises from a motor oil depot on the outskirts of Erbil, after it was hit by a drone attack. Photo: Ismael Adnan/dpa

Iraqi oil fields once alive with the buzz of workers are nearly deserted. Ports that pulsed with the churn of cargo have fallen still, the din of commerce replaced by the soft rhythm of waves.

A month after the war in Iran started, workers at ports and oil fields in the province of Basra, where almost all of Iraq's crude is produced and exported, have grown accustomed to rockets streaking across the sky, aimed at US air bases and other strategic facilities, The Associated Press said.

The war, which began with US-Israeli strikes, is dealing a heavy blow to Iraq's economy. Iraq relies on oil revenues for roughly 90% of its budget, and most of its oil is exported through the Strait of Hormuz, the narrow mouth of the Arabian Gulf where Iran has effectively stopped cargo traffic during the conflict. The war also has led to a sharp reduction in the volume of imported goods reaching southern Iraq's ports, while attacks have halted traffic at the border it shares with Iran.

Unlike other countries in the Middle East touched by the war, Iraq hosts both entrenched Iran-aligned forces and significant US interests, leaving it exposed to attacks from both sides. Since the war started, oil production in southern Iraq, where Basra is located, has fallen by more than 70% and the volume of imported goods reaching the country's ports has been cut in half. Drone and missile attacks have targeted American companies and military bases. Iran's allied Iraqi militias also have struck oil fields and energy infrastructure. Many foreign workers have left.

The Iraqi government should have enough funds to get through mid-May without new oil sales, according to experts, but then it will have to borrow money.

“After that, the government would resort to issuing bonds,” said Ahmed Tabaqchali, an expert in Iraq’s economy. “But not without consequences.”

Oil production suspended

Across southern Iraq, the closure of the Strait of Hormuz has prompted oil fields to scale back production and focus on domestic needs, while oil prices around the globe have risen. Basra’s Zubair oil field, once producing around 400,000 barrels per day, has seen output drop to roughly 250,000, officials said.

Iran has offered assurances that Iraqi crude can safely transit the strait, said Bassem Abdul Karim, the head of the state-run Basra Oil Company, which oversees production in the province. However, because Iraq lacks its own tanker fleet and depends on chartered vessels, shipments ultimately hinge on whether tanker owners are willing to accept the heightened risks of making the journey. Most are not.

At a degassing station in Zubair, where crude is processed, production has also slowed dramatically. “It’s quiet now because of the reductions,” said chief engineer Ammar Hashim. “Of course we are worried.”

The downturn in Zubair reflects a broader decline in Basra. Output has dropped from 3.1 million barrels per day to roughly 900,000 across the province, according to Abdul Karim.

“Exports are currently completely halted. At the moment, we are considering alternative loading areas, but none are fully operational,” he told The Associated Press.

That morning, a drone crashed in the Majnoon oil field north of Basra without detonating. A security official said it's an increasingly common occurrence, adding that the drone was likely headed toward US bases in Kuwait. Production at the field has been suspended due to the frequency of these events. The official spoke on condition of anonymity because he was not permitted to speak to news media.

Hundreds of employees from American, British, Italian, French and other international oil companies have left Iraq due to the war. The departures accelerated after a March 6 drone strike hit the Burjisiya complex in Basra, a key logistics hub for Iraq’s oil industry used by numerous companies. The attack targeted US oil services company KBR, striking its chemical storage facility.

Another drone struck the British-Petroleum operated Rumaila oil field, prompting some foreign workers there to leave, said Abdul Karim. The field is still operating, he said. On Wednesday, multiple drones attacked a fuel warehouse linked to BP in northern Iraq.

Efforts to reroute Iraq's oil face major constraints: The country doesn't have the capacity to boost exports via its northern pipeline, and trucking through Jordan and Syria is costly and inefficient, said Abdul Karim.

Shipping lanes closed Umm Qasr, Iraq’s primary deep-water port, was once so noisy with imported cargo that it could give you a headache, workers there said.

Now, with the Strait of Hormuz closed, large mother ships bringing shipments to Iraq can no longer get to the port. Instead, they dock in the United Arab Emirates, where the cargo is carried by trucks and then smaller ships to get to Umm Qasr, a costly workaround.

The port’s jetties are running well below their former capacity, with volumes halved by the war, according to port director Mohammed Tahir Fadhil.

When the AP visited, just one cargo ship from the U.A.E. had docked.

The threat to shipping lanes escalated after Iran destroyed two tankers on March 11 in Iraqi waters, the Marshall Islands-flagged Safesea Vishnu and the Malta-flagged Zefyros.

“Today, our only gateway for goods is the United Arab Emirates,” said Farhan Fartousi, director of the Iraqi Ports Company.

Trade disrupted

On Sunday morning, Haidar Abdul-Samad, deputy director of Basra’s Shalamcha border crossing with Iran, was on the phone with an Iranian official, complaining about electricity cuts that had halted trade, urging a quick resolution. The power cuts followed an airstrike that hit the Iranian side of the crossing.

Such disruptions, local officials say, have become routine.

Before the war, the crossing saw constant movement, reflecting strong familial and commercial ties between Iranians and Iraqis in the area. It is also a key transit point for traders and pilgrims heading to Shiite holy sites in central Iraq.

That morning, trucks were backed up for miles.

“Priority is given to food supplies to prevent price increases,” Abdul-Samad said. “Passenger movement is not at the same level as before; activity has declined due to the war in Iran.”

Once electricity was restored, 30-year-old Iranian trader Atefa Al-Fatlawi arrived with her husband and young son. She buys goods at lower prices in Basra to sell back home.

“We are scared because of the bombings,” she said. “Shalamcha was targeted. Today, there were no transport vehicles at the garage because of the attack.”



Saudi Investment Minister: Our Economy Offers Major Opportunities for French Companies

Saudi Minister of Investment Fahad Al-Saif and France’s Minister of Economy, Finance and Industrial, Energy and Digital Sovereignty, Roland Lescure. Asharq Al-Awsat
Saudi Minister of Investment Fahad Al-Saif and France’s Minister of Economy, Finance and Industrial, Energy and Digital Sovereignty, Roland Lescure. Asharq Al-Awsat
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Saudi Investment Minister: Our Economy Offers Major Opportunities for French Companies

Saudi Minister of Investment Fahad Al-Saif and France’s Minister of Economy, Finance and Industrial, Energy and Digital Sovereignty, Roland Lescure. Asharq Al-Awsat
Saudi Minister of Investment Fahad Al-Saif and France’s Minister of Economy, Finance and Industrial, Energy and Digital Sovereignty, Roland Lescure. Asharq Al-Awsat

Saudi Minister of Investment Fahad Al-Saif said Monday that French foreign direct investment in Saudi Arabia has reached €16.3 billion, noting that France is the Kingdom’s fourth-largest source of FDI.

He added that the presence of French companies in Saudi Arabia now spans more than 18 sectors.

Speaking at the opening of the French-Saudi Investment Roundtable hosted in Paris, which was also attended by Roland Lescure, France’s Minister of Economy, Finance and Industrial, Energy and Digital Sovereignty, Al-Saif said French companies hold around 650 investment licenses in the Kingdom.

This, he said, reflects the extent of French business activity and the growing opportunities available within the Saudi economy.

The meeting is being held as part of the official visit of Crown Prince and Prime Minister Mohammed bin Salman to France. Organized by the Ministry of Investment, it brings together government officials, business leaders, and chief executives from major companies in both countries.

Discussions focus on opportunities to expand partnerships in sectors including industry, transport and logistics, artificial intelligence, and digital infrastructure, among others. New agreements and memoranda of understanding are also expected to be signed.

Energy Tops Areas of Cooperation

The Investment Minister noted that the oil and gas sector is among the industries most likely to benefit from strengthened Saudi-French relations, given the long-standing presence of French companies in the Kingdom’s energy sector.

Cooperation also extends across the broader energy landscape, including renewable energy, hydrogen, and grid infrastructure, while French firms continue to expand their footprint in energy, industry, transport, construction, water, and services.

Energy remains one of the most prominent areas of French involvement in Saudi Arabia, alongside growing opportunities in new sectors closely linked to the Kingdom’s economic diversification drive under Vision 2030.

From Energy and Industry to Artificial Intelligence

The investment partnership between the two countries is increasingly expanding beyond traditional sectors into the new economy, particularly artificial intelligence, digital infrastructure, culture, creative industries, and mining.

The inclusion of these sectors on the roundtable agenda reflects both sides’ efforts to transform established economic ties into investment partnerships in some of the fastest-growing industries, capitalizing on rising demand in the Saudi market and the technological and industrial capabilities of French companies.

French firms are already active in sectors such as transport and logistics, water and environmental services, hospitality, and healthcare. As the Saudi economy continues to expand, additional opportunities are emerging in advanced technology and manufacturing.


IEA: Not Discussing 2nd Release of Strategic Oil Reserves

Strategic oil reserve tanks in Texas (Reuters)
Strategic oil reserve tanks in Texas (Reuters)
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IEA: Not Discussing 2nd Release of Strategic Oil Reserves

Strategic oil reserve tanks in Texas (Reuters)
Strategic oil reserve tanks in Texas (Reuters)

The International Energy Agency is not discussing a second release of strategic oil reserves at this time, IEA chief Fatih Birol told Reuters on Monday.

"Not for the time being," Birol said on the sidelines of an energy conference in Norway ⁠when asked whether ⁠the agency was discussing a second release of strategic reserves.

The IEA is always following the markets "very, very closely", and 80% of strategic reserves remain ⁠after a 400 million-barrel release in March, Birol added.

On gas, Birol expressed concerns Europe's current levels of gas reserves, which are around 62% according to transparency platform AGSI.

The European Union has a target of filling levels to 80% by December 1.

"The stocks are ⁠lower ⁠than historical averages, and we are still hoping to get gas from the Middle East, and at the same time ... Europe has committed itself to nullify the Russian gas imports," he said.

"If we have a harsh winter in Europe, we may have some challenges."


Fewer Than 20 Ships Transited Strait of Hormuz at the Start of the Week

Vessels near the Strait of Hormuz, as seen from Musandam, Oman, August 24, 2026. REUTERS/Stringer
Vessels near the Strait of Hormuz, as seen from Musandam, Oman, August 24, 2026. REUTERS/Stringer
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Fewer Than 20 Ships Transited Strait of Hormuz at the Start of the Week

Vessels near the Strait of Hormuz, as seen from Musandam, Oman, August 24, 2026. REUTERS/Stringer
Vessels near the Strait of Hormuz, as seen from Musandam, Oman, August 24, 2026. REUTERS/Stringer

Fewer than 20 commodity vessels transited the Strait of Hormuz at the start of the week, shipping data showed on Monday, as Iranian and US blockades restrict traffic through the chokepoint for energy shipments.

Four vessels crossed the strait on Sunday, initial data from shiptracker Kpler showed by 0228 GMT, with 13 on Saturday. The figures could change as some ships had switched off transponders on their way through.

That compared with Friday's figure of 16 transits, with two empty very large crude carriers (VLCCs) entering the Gulf with the tracking devices switched off, one heading to Iraq and the other to ⁠Bahrain, the data ⁠showed.

A VLCC carrying 2 million barrels of Emirati crude exited the strait on Thursday.

Eight very large gas carriers transited the strait over the past three days, the data showed, according to Reuters, six of them entering empty while the others carried liquefied petroleum gas (LPG) loaded from Iran and exited the Gulf.

Overall traffic volumes remained suppressed ⁠in the week to August 21, as vessels aborted transit plans or switched routes through the strait's north after attacks, the United Kingdom Maritime Trade Operations (UKMTO) agency said in a report.

A total of 89 vessels exited the strait while 103 entered over the seven-day period, the report, based on Automatic Identification System (AIS) data, showed.

"Traffic remains well below normal levels, with AIS-detected transits approximately 90% below pre-conflict baselines and declining since the June 24 to June 26 peak," it added.

Tanker traffic, at 45% of the total, continued ⁠to dominate movement ⁠through the strait, the agency said. Of these, 56% were tankers that carry crude oil, oil products or chemicals while LPG carriers accounted for a further 24%.

Since July 6, the UKMTO has reported 23 incidents of projectile strikes, leading to bridge, engine-room, and structural damage across vessels in the strait and its vicinity.

A total of 24 commodity vessels sailed through the Bab el-Mandeb strait on Sunday, down from Saturday's figure of 32, which was an increase from 22 on Friday, Kpler data showed.

Two VLCCs entered the Red Sea on Saturday with one carrying Iraqi Basrah crude and the other empty, it showed.