According to BOE Report, Iraq has cut oil production by nearly 1.5 million barrels per day and could expand cuts to over 3 million bpd as the country runs out of storage capacity due to export disruptions from the Iran crisis. The cuts affect major fields including Rumaila (700,000 bpd reduction), West Qurna 2 (460,000 bpd), and Maysan (325,000 bpd).
Traffic through the Strait of Hormuz remains closed for a fourth consecutive day after Iranian attacks on five ships, choking off a key route that handles about 20% of global oil and LNG supply. Iraq typically exports 3.33 million bpd, with China and India receiving nearly two-thirds of those volumes.
What It Means for Subcontractors
- Expect continued volatility in fuel and diesel costs as global oil supply tightens, affecting equipment operating expenses and transportation costs
- North American drilling activity could see increased investment as operators seek alternatives to Middle Eastern supply disruptions
- Supply chain delays likely for equipment and materials shipped through affected Gulf routes, requiring longer lead times for project planning
