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.”



IMF: Egypt Staff Mission May Lead to $1.6 Billion Disbursement this Summer

Traffic is seen on a street in central Cairo. Photo: Asharq Al-Awsat
Traffic is seen on a street in central Cairo. Photo: Asharq Al-Awsat
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IMF: Egypt Staff Mission May Lead to $1.6 Billion Disbursement this Summer

Traffic is seen on a street in central Cairo. Photo: Asharq Al-Awsat
Traffic is seen on a street in central Cairo. Photo: Asharq Al-Awsat

The International Monetary Fund said on Thursday that a staff mission is currently in Egypt to conduct the latest reviews on the country's Extended Fund Facility and Resilience and Sustainability Trust loan programs, which ⁠will determine a ⁠possible $1.6 billion disbursement.

IMF spokesperson Julie Kozack told a news briefing that if the review mission results ⁠in a staff-level agreement with Egyptian authorities, a board vote on completion of the reviews and the disbursement could take place over the summer months.

But she commended Egyptian authorities on making ⁠decisive policy ⁠actions that have limited the economic impact of the US-Israeli war on Iran, including keeping fiscal pressures in check.

She said that the IMF staff mission will confirm the resiliency of Egyptian growth.


Saudi Property Measures Help Curb Global Inflation Pressures

A food market in Saudi Arabia (SPA)
A food market in Saudi Arabia (SPA)
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Saudi Property Measures Help Curb Global Inflation Pressures

A food market in Saudi Arabia (SPA)
A food market in Saudi Arabia (SPA)

At a time when the global economy is grappling with strong waves of price pressures caused by the Iran war and disruption in the Strait of Hormuz, Saudi Arabia has managed to chart a different course.

Inflation continued to slow, settling at one of the lowest levels globally, supported by stable rents and regulatory measures to balance supply and demand.

The performance reflected the effectiveness of preemptive government measures and fiscal and monetary policies that helped shield the domestic market from the repercussions of geopolitical crises and global supply chain disruptions.

The latest official data showed that annual inflation slowed to 1.7% in April, according to the General Authority for Statistics.

The Ministry of Finance expects inflation in the Kingdom to slow to around 2% in 2026, compared with 2.3% in 2025.

The slowdown was supported by a slower rise in the cost of housing, water, electricity, gas, and other fuels, which increased by 3.8% compared with previous levels.

The stabilization of actual housing rents at 4.8% for the second month in a row also indicates that the market has begun to absorb regulatory measures. This raises an urgent question in economic circles over whether the Kingdom has already entered a phase of sustainable rent containment.

Experts say this stability could pave the way for further declines in the near term, especially after the approval of the executive regulations on fees for vacant properties, which aim to improve the efficiency of the real estate system and achieve a balance between supply and demand.

The fees are expected to increase real estate supply, which would in turn help lower prices and reduce them at the broader level across the Kingdom, strengthening its position as one of the G20 economies most capable of curbing price pressures.

The government has intensified its efforts to lower real estate prices and continues to do so.

This has come under the directives of Crown Prince and Prime Minister Prince Mohammed bin Salman, who ordered a number of measures to address the issue and bring balance to the real estate sector, after the system, particularly in the capital Riyadh, saw a wave of increases in land prices and rents in recent years.

Data details

Prices in the housing, water, electricity, gas, and fuels group, the second most influential category in inflation, slowed to 3.8% year on year in April, compared with 3.9% in March, recording the lowest rate of increase since the start of the year.

Inflation in actual housing rents also stabilized for the second month in a row at 4.8%, also the lowest rate of increase since the start of 2026.

Monthly comparison

On a monthly basis, the Consumer Price Index rose 0.2% compared with March, as prices increased for food and beverages, housing, and energy. In contrast, stable transport prices and declines in some furniture and clothing items helped limit the acceleration in inflation, keeping rates within moderate levels compared with regional and global markets.

Food and beverage prices, the largest group by weight in the consumer price basket, accelerated to 0.6% in April from 0.3% in March, mainly driven by higher food prices.

Transport prices rose 1% year on year, a slowdown from the previous month and the second-lowest rate of increase since the beginning of the year, helping limit the rise in overall inflation.

Real estate experts told Asharq Al-Awsat that government measures affecting the real estate sector would lower prices, which would, in turn, gradually reduce inflation in Saudi Arabia in the coming period. They said the housing, water, electricity, gas, and fuels group carries significant weight in the inflation rate.

Curbing monopoly

Dr. Osama bin Ghanem Al-Obaidy, an adviser and professor of international commercial law, attributed the slowdown to the stabilization of housing rents, especially after the approval of regulations imposing annual fees of up to 5% of the building’s value on vacant properties.

He said the executive regulations would encourage owners to use their vacant properties and put them on the market, increasing supply and lowering rental prices, thereby affecting real estate inflation by creating a balance between supply and demand.

He said the new regulations followed a series of government measures, including fees on undeveloped urban land, regulation of undeveloped plots, a five-year rent freeze, the development of large housing projects, and incentives for developers to increase real estate supply.

These efforts aim to achieve a more sustainable balance between supply and demand, leading to a further reduction in real estate inflation and, subsequently, a decline in the overall inflation rate.

Larger decline in rents

Economic expert Ahmed Al-Shihri said the slowdown in Saudi Arabia’s annual inflation rate was supported by the stabilization of actual housing rents. He said government moves related to the real estate system had helped calm the pace of increases in housing costs.

Al-Shihri said the decline coincided with the approval of the executive regulations for fees on vacant properties, aimed at boosting real estate supply and encouraging owners of unused units to inject them into the market.

He expected the move to contribute to a larger, gradual decline in rental prices in the coming period, once a better balance between supply and demand is achieved. This would ease pressure on rental prices and strengthen the housing market's stability, potentially supporting the continued slowdown in inflation to low levels compared with several regional and global economies.

He said real estate prices are among the groups with the greatest impact on inflation, meaning that a decline in the sector across the Kingdom would help gradually lower the rate in the coming period.

In conclusion, the data and accelerating legislative moves show that the Kingdom is not merely monitoring inflation indicators but is proactively addressing the roots of price challenges, especially in the real estate sector, which directly affects citizens’ quality of life.

With the executive regulations on fees for vacant properties entering into force and integrated with housing programs and increased supply, the Saudi economy appears to be moving steadily toward consolidating a phase of sustainable price stability. This enhances the appeal of the investment environment and supports households’ long-term financial planning.


IMF Says Constructive US-China Dialogue Good for World Economy

The US and Chinese flag at the Great Hall of the People prior to the state dinner of President Donald Trump and Chinese President Xi Jinping on Thursday May 14, 2026, in Beijing. (AP Photo/Mark Schiefelbein)
The US and Chinese flag at the Great Hall of the People prior to the state dinner of President Donald Trump and Chinese President Xi Jinping on Thursday May 14, 2026, in Beijing. (AP Photo/Mark Schiefelbein)
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IMF Says Constructive US-China Dialogue Good for World Economy

The US and Chinese flag at the Great Hall of the People prior to the state dinner of President Donald Trump and Chinese President Xi Jinping on Thursday May 14, 2026, in Beijing. (AP Photo/Mark Schiefelbein)
The US and Chinese flag at the Great Hall of the People prior to the state dinner of President Donald Trump and Chinese President Xi Jinping on Thursday May 14, 2026, in Beijing. (AP Photo/Mark Schiefelbein)

The International Monetary Fund said on Thursday that it welcomes the initial positive dialogue between US President Donald Trump and Chinese President Xi Jinping, adding that reducing tension and uncertainty between the world's ⁠two largest economies ⁠was good for the world.

"It's very important, of course, that the world's two largest economies are engaging ⁠at the highest level," IMF spokesperson Julie Kozack told a news briefing when asked about the Trump-Xi summit's initial outcomes in Beijing.

"We certainly welcome the fact that there's a constructive dialogue between ⁠the ⁠two countries. Anything that is going to help reduce trade tensions and reduce uncertainty is good for both of those large economies, and, of course, good for the global economy as well," Kozack added, according to Reuters.

Kozack also said that that the IMF was paying close attention to the energy shock caused by ⁠the conflict in the Middle East and its implications for ⁠fertilizer shipments.

History showed it took about six months for increases in fertilizer prices to translate into higher food prices, ⁠and ⁠in some cases reduced yields and food security issues, Kozack added.