According to Bloomberg, Iraq’s current production level is about 1.7-1.8 million bpd, up from about 4.3 million bpd before the conflict began.
The decline is primarily due to logistical problems in the Persian Gulf. The fighting has led to a sharp reduction in the number of tankers capable of loading and transporting oil. As a result, with limited transportation capacity, producers are forced to reduce production as oil storage facilities quickly fill up.
According to the agency, Iraq became the first major oil-producing state in the region to be forced to cut production because of the conflict. Later, other Gulf countries, including the United Arab Emirates and Kuwait, took similar measures.
The logistics crisis has filled oil storage facilities
A key factor in the crisis has been the stoppage of traffic through the Strait of Hormuz, one of the most important routes for global energy trade. Analysts estimate that about a fifth of the world’s oil exports pass through this waterway, so any prolonged disruptions pose serious risks to global supplies.
With limited access to tankers and shrinking export routes, Gulf oil-producing countries are forced to send oil to storage, but available storage capacity is shrinking rapidly.
Chain reaction in the oil market
Iraq was the first major oil producer in the region to be forced to significantly reduce production. After that, other Gulf countries, including Kuwait and the UAE, began to take similar measures.
Analysts warn that a prolonged crisis could cause one of the biggest oil supply disruptions in decades. According to forecasts, oil prices could exceed $100 a barrel if transportation through the strait is not restored.
Risks to the global economy
The situation is already impacting the global energy market. Many Asian countries, including major oil importers China and India, depend on supplies from the Persian Gulf. Restricting exports could lead to higher fuel prices, higher inflation and slower global economic growth.
Experts note that even after the restoration of shipping, it will take time to normalize supplies, as the chains of logistics, insurance and tanker freight have been severely disrupted.
