Iraqi oil production from its main southern oilfields has fallen by 70 per cent to just 1.3 million barrels per day as the country is unable to export oil via the Strait of Hormuz due to the Iran war.
Production from the fields stood at around 4.3 million barrels per day before the war.
"Crude storage has reached maximum capacity and the remaining output after the major cut will be used to supply the country's refineries," said an official with the state-run Basra Oil Company, which manages production and export operations from the southern fields.
Key global chokepoint
The Strait of Hormuz is one of the world's key oil transit choke points, carrying roughly a fifth of global oil and liquefied natural gas flows.
The OPEC member's exports also fell sharply to an average of around 800,000 barrels per day on Sunday, with only two tankers loading because vessels cannot move freely through the strait to Iraq's southern terminals, the source said.
The two tankers, Cospearl Lake and Yuan Hua Hu, each completed loading about two million barrels of crude and with no new vessels arriving, oil flows from Iraq's southern export terminals were halted, three oil officials and a shipping agent told Reuters.
Iraq's oil exports from the southern oilfields stood at 3.334 million barrels per day in February, an oil ministry document showed.
A drop in Iraq's oil production and exports is set to strain the country's already fragile finances, as the state relies on crude sales for nearly all public spending and more than 90 per cent of its income.
"This is the most serious operational threat Iraq has faced in more than 20 years," a senior Iraqi oil ministry official said.
AAP
