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.”



$19 Billion as a Starting Point: Paris-Riyadh Roundtable Seeks to Expand Investment in the Sectors of the Future

A view of the Saudi-French Business Forum held last year in Riyadh. SPA
A view of the Saudi-French Business Forum held last year in Riyadh. SPA
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$19 Billion as a Starting Point: Paris-Riyadh Roundtable Seeks to Expand Investment in the Sectors of the Future

A view of the Saudi-French Business Forum held last year in Riyadh. SPA
A view of the Saudi-French Business Forum held last year in Riyadh. SPA

An investment base worth €16.3 billion, equivalent to approximately $19 billion (SAR71.5 billion), is serving as a new starting point for Monday’s French-Saudi Roundtable in Paris, where participants are exploring ways to expand economic cooperation into the industries of the future.

This foundation comes at a time when Saudi-French economic relations are broadening beyond traditional investments into sectors more closely aligned with economic transformation goals, particularly technology, artificial intelligence, energy, advanced manufacturing, and infrastructure.

Against this backdrop, both countries have an opportunity to leverage existing investments as a platform for new deals and projects that will strengthen the presence of French companies in Saudi Arabia while simultaneously creating opportunities for Saudi capital to expand into promising sectors in France and across Europe.

French investment in the Kingdom is increasingly targeting new strategic sectors, with French companies entering fields such as artificial intelligence, digital infrastructure, culture and creative industries, and mining.

This expansion builds on a long-established French presence in Saudi Arabia’s energy and industrial sectors, where manufacturing accounts for roughly 60 percent of French foreign direct investment.

A Trillion-Euro Economy

Saudi Arabia combines policy clarity, a stable economic environment, and strong economic fundamentals with a large and rapidly growing market. It is the region’s largest economy, with a GDP of around €1.1 trillion, and is developing new industries as part of its national economic diversification program under Vision 2030.

Its expanding industrial base and growing domestic demand provide significant opportunities for French investors to strengthen their presence in sectors where they already have an established foothold while also entering fast-growing new industries.

French companies continue to deepen their involvement in long-standing sectors ranging from energy and industry to transport, construction, and engineering, while simultaneously moving into emerging fields such as artificial intelligence, digital infrastructure, culture, and mining as the Saudi economy accelerates its growth.

One of the most significant recent milestones in bilateral relations was the signing of the Comprehensive Strategic Partnership at the end of 2024, opening broader avenues for cooperation in new sectors. Bilateral trade reached approximately €10.1 billion in 2025, up 7.2 percent from the previous year.

French President Emmanuel Macron and Saudi Crown Prince Mohammed bin Salman attend the closing ceremony of the Esports World Cup at the Grand Palais in Paris, France, August 23, 2026. Bandar Algaloud/Courtesy of Saudi Royal Court/Handout via REUTERS

Foreign Direct Investment

France ranks as the fourth-largest source of foreign direct investment in Saudi Arabia, with an investment valued at approximately €16.3 billion in 2024. French businesses hold 651 investment licenses across 18 sectors in the Kingdom.

Manufacturing represents around 60 percent of French FDI, highlighting the industrial strength of the relationship. French companies operating in Saudi Arabia include major investors such as TotalEnergies, Sanofi, Veolia, Suez, Accor, and Schneider Electric, among others.

Growing Saudi Presence in France

Saudi Arabia’s Public Investment Fund (PIF) invested approximately €7.36 billion in France between 2017 and 2024, supporting nearly 29,000 jobs.

In addition, a financing memorandum of understanding between the Saudi sovereign fund and Bpifrance, worth around €8.56 billion, provides a framework for expanded investment cooperation.

The partnership is also taking on a new dimension, as Qiddiya Investment Company and the French government explore a cooperation framework to develop a global destination that combines entertainment, sports, and culture in France.

The initiative would extend Saudi expertise in destination development internationally and reflects the increasingly reciprocal nature of the partnership.

French firms maintain established positions in energy, industry, transport, and hospitality, while simultaneously expanding into new sectors as Saudi Arabia’s economy evolves.

New Agreements Expected

New agreements and memoranda of understanding are expected to reinforce the French presence in sectors where French companies already enjoy a strong foothold.

In energy, companies such as TotalEnergies, EDF, SLB, and Schneider Electric have significant operations in the Kingdom across oil and gas, power generation, and energy infrastructure.

French firms also play major roles in water and environmental services, transport and logistics, construction and consulting, hospitality, and healthcare.

Saudi Arabia offers a stable regulatory, economic, and financial environment that supports major capital commitments. Clear development strategies provide investors with greater visibility regarding the economy’s future direction, while strong fundamentals support long-term implementation.

Meanwhile, Vision 2030 firmly positions economic diversification as a long-term national priority. The National Investment Strategy seeks to stimulate investment, while sector-specific strategies create opportunities throughout value chains.

Ongoing regulatory reforms continue to open new opportunities and improve the investment climate. Updated investment laws provide equal treatment for investors and strengthen investor protections, including safeguards against expropriation and clear mechanisms for the repatriation of funds.

Creditworthiness and Economic Stability

Saudi Arabia holds an A+ sovereign credit rating with a stable outlook, reaffirmed by S&P Global Ratings in March. The Kingdom’s total reserve assets reached approximately €421.5 billion in June 2026.

Over several decades, Saudi Arabia has invested heavily in infrastructure and operational capabilities that support sustained economic and commercial activity.

The International Monetary Fund has cited low government debt, substantial reserves, and the size of the sovereign wealth fund as key strengths, while identifying the fixed exchange-rate regime as a reliable anchor of monetary stability.

Opportunities are no longer limited to individual projects. Saudi Arabia is expanding integrated economic sectors, generating growing demand across value chains, and building the infrastructure, financing systems, and operating environment companies need to grow.

Investment opportunities now span more than 15 sectors, many of which already feature strong French participation.

The Saudi Industrial Development Fund provides financing of up to 75 percent of eligible project costs, alongside industrial incentives of up to 35 percent. Special Economic Zones offer targeted incentives in strategic industries, while the Regional Headquarters Program provides companies with a platform for regional expansion.

Artificial Intelligence

Saudi Arabia continues to strengthen its position as a regional hub for artificial intelligence and technology through substantial investments in digital infrastructure. The Kingdom ranked first globally in the 2025 ICT Development Index issued by the International Telecommunication Union.

The ICT market grew by 89 percent compared with 2017, while the digital economy accounted for approximately 16 percent of GDP in 2024.

Saudi Arabia aims to develop 3 gigawatts of AI infrastructure capacity by 2030. Data center capacity has reached 440 megawatts, nearly six times the 2017 baseline, supported by investments exceeding €3.85 billion.

Announced AI partnerships exceed €19.7 billion in value. Cloud regions operated by Oracle and Google Cloud are already operational, while cloud regions developed by AWS and Microsoft are expected to become operational during 2026.

Energy

The energy sector remains one of the most important pillars of French investment in the Kingdom and offers significant growth prospects. French companies are involved in energy projects in Saudi Arabia worth more than €16.3 billion, while consortia led by French firms participate in solar projects with a combined capacity of 11 gigawatts.

Opportunities span renewable energy, energy storage, hydrogen, and grid infrastructure.
In tourism, French companies enjoy a strong presence in a rapidly expanding market. Saudi Arabia recorded approximately 123 million visits in 2025, generating nearly €69.3 billion in tourism spending. The Kingdom aims to attract 150 million visits annually by 2030.

A Platform for Regional Growth

More than 750 companies have established regional headquarters in Riyadh under Saudi Arabia’s Regional Headquarters Program, including 39 French companies operating across eight sectors.

The program offers qualifying companies a 30-year exemption from corporate income tax and withholding tax, giving French firms with extensive operations in the Kingdom a strategic base from which to manage and expand their activities across the region.


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."