Iraq cuts oil production 1.5M barrels daily as Hormuz crisis blocks exports
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
