ERBIL, Kurdistan Region - Iraq’s oil ministry said on Tuesday that the recent reduction in crude oil production - caused by halted exports following the closure of the Strait of Hormuz - “will not affect refinery operations or the continued production of petroleum derivatives and liquefied petroleum gas (LPG).”
Following US and Israeli strikes on Iran on Saturday that killed dozens of senior officials, including Iranian Supreme Leader Ayatollah Ali Khamenei, Tehran vowed retaliation, targeting several regional countries hosting US military bases. The Islamic Revolutionary Guard Corps (IRGC) announced on Monday that the Strait of Hormuz had been closed, warning that any vessel attempting to enter the waterway would be targeted.
The Iraqi oil ministry stressed that “all refineries in the south, center, and north are operating continuously at their designed capacity.”
“These refineries supply the quantities required for daily domestic consumption, and any surplus is stored in various product depots,” the ministry added.
The closure of the Strait of Hormuz could slash Iraq’s monthly revenue from $7 billion to $1 billion, Mazhar Mohammed Salih, an economic advisor to Prime Minister Mohammed Shia' al-Sudani said on Tuesday, as tensions escalate in the strategic waterway.
The advisor also said that disruptions to oil exports are costing Iraq between $200 million and $255 million per day. Even if oil prices rise to $150 per barrel, Iraq’s monthly revenue could still fall from $7 billion to $1 billion under the current circumstances, he said.
“The closure of the Strait of Hormuz poses a severe challenge to Iraq’s economy, as the country relies heavily on this route to export oil. Approximately 94 percent of Iraq’s oil exports pass through its southern ports,” Salih warned.
He added that oil exports could drop from 3.4 million barrels per day (bpd) to less than 250,000 bpd if the waterway remains closed.
Iraq needs to export around 3.5 million bpd to cover public sector salaries, ministry expenditures, and development projects.
Meanwhile, oil exports from the Kurdistan Region through Turkey have been suspended due to the ongoing regional conflict, two Iraqi government sources and one producer told Rudaw on Tuesday.