Iraq Oil Exports Halted by Iran

A month after the war in Iran began with U.S.-Israeli strikes, Iraq's economy is facing a severe blow. The conflict has led to the effective closure of the Strait of Hormuz by Iran, halting nearly all of Iraq's crude oil exports and significantly reducing imported goods. Oil production in southern Iraq has fallen by over 70%, with fields like Zubair and Majnoon experiencing drastic output reductions or suspensions. Drone and missile attacks, often attributed to Iran-aligned Iraqi militias, have targeted U.S. military bases, American companies like KBR, and oil infrastructure, including BP-operated fields. Foreign workers from international oil companies have largely departed. The Iraqi government is projected to run out of funds by mid-May without new oil sales, potentially forcing it to issue bonds. Shipping lanes are severely impacted, with tankers unwilling to risk transit through the Strait of Hormuz, forcing costly rerouting of cargo through the United Arab Emirates. Trade at border crossings with Iran, such as Shalamcha, has also been disrupted by airstrikes and electricity cuts.