Country Brief: Iraq

Energy Profile

MetricValue
Crude oil production~4.5M bbl/day (federal fields) + ~285K bbl/day (KRG)
OPEC+ quota (Q1 2026)4.273M bbl/day
Exports (2025 avg)~3.45M bbl/day total
Southern exports (Basra)~3.05M bbl/day (88% of total exports)
Northern exports (Ceyhan)~250K bbl/day (sole non-Hormuz route; pact ends Jul 27, 2026)
Proven reserves~145B barrels (5th largest globally)
Oil revenue share of GDP~90% of government revenue
Hormuz dependency~88% of exports (southern terminals behind Hormuz)

Key Infrastructure

  • Basra Oil Terminal (ABOT): Up to 3M bbl/day capacity (upgraded early 2025); 4 supertanker berths; handles ~85% of southern exports, fully exposed behind Hormuz
  • Khor al-Amaya Oil Terminal (KAAOT): ~240K bbl/day current capacity (2 berths, partially rehabilitated; expansion to 600K+ planned); secondary Gulf terminal
  • Sealine 3 pipeline: 70 km pipeline (61 km offshore) under construction; 2.4M bbl/day design capacity; completion targeted late 2027; construction status uncertain due to conflict; offshore work likely paused given Gulf shipping halt and security risk to construction vessels
  • Iraq-Turkey Pipeline (ITP): Kirkuk to Ceyhan (Turkey); ~250K bbl/day moving as of June, Iraq’s only non-Hormuz export route; flows intermittent on regional security; Turkey terminates the 1973 pipeline agreement effective Jul 27, 2026 (a replacement framework is still under negotiation, ~2 months out)
  • Al Faw Grand Port: Under construction; future oil/commercial terminal near Basra
  • Southern refineries: Basra (210K bbl/day), Nasiriyah, Dhi Qar

Key Actors

  • South Oil Company (SOC): operates southern fields and Basra terminals
  • State Organization for Marketing of Oil (SOMO): crude oil marketing and export
  • Kurdish Regional Government (KRG): controls northern fields (~285K bbl/day)
  • Popular Mobilization Forces (PMF/Hashd al-Shaabi): Iran-aligned militia umbrella; 100K+ fighters
  • Kataib Hezbollah: most powerful Iran-aligned PMF faction; designated terrorist organization by US
  • PM Mohammed Shia al-Sudani: balancing federal control, KRG relations, and militia pressure

Crisis Exposure (Day 94: Choked Hormuz, Loose Ceasefire)

  • Southern Gulf exports near zero. Iraqi crude through the Strait of Hormuz fell ~89% in April (~10M barrels for the month vs a ~93M baseline). Open transits collapsed to near zero again from ~May 6 after the brief Project Freedom escort window closed. Southern field output fell ~80% at the trough (from ~4.3M bbl/day pre-war to ~800K bbl/day). The bottleneck is the strait, not the reservoir.
  • The strait is open on paper, choked in practice. Hormuz was declared “open” but transits stay near zero; mines laid by Iran are still uncleared, Iran has charged tolls reported above $1M per ship, and P&I/war-risk cover is not restored. ~600 tankers are stranded inside the Gulf and ~240 waiting outside.
  • Only working bypass: Kirkuk-Ceyhan ~250K bbl/day. This is Iraq’s sole non-Hormuz route, and flows are intermittent on regional security. The 1973 pipeline agreement terminates Jul 27, 2026; a replacement framework is still being negotiated with ~2 months on the clock.
  • Storage is the binding constraint. With ~35.5M barrels of storage against ~4.2M bbl/day capacity, tanks saturate in ~25-30 days and force full field shutdowns. Iraq holds no tanker fleet of its own and no meaningful export buffer.
  • Restart lag: ~90 days of stop-start shut-ins mean Iraqi supply does not snap back even if Hormuz clears. Reservoir damage risk and tank saturation lengthen the ramp to weeks or months.
  • Fiscal damage compounding: ~3 months of near-zero southern exports on a ~90% oil-dependent budget. The fiscal squeeze is acute, forcing emergency borrowing and reserve drawdown.
  • Diplomatic overlay: a tentative 60-day US-Iran MoU (reached May 28, still UNSIGNED) would reopen Hormuz with no tolls and clear mines within 30 days in exchange for lifting the US blockade and some sanctions waivers. Trump added new demands May 29-30; both sides say it is not finalized. For Iraq, the MoU is the only credible path back to southern exports, and it has not been signed. The range of outcomes is mapped in our Hormuz reopening scenarios.
  • Iraq airspace open since Apr 8 (had been closed 40 days from Feb 28); commercial aviation continues to operate.
  • OPEC+ quota of 4.273M bbl/day is meaningless while exports cannot reach market through a choked strait.
  • Kuwait remains a parallel casualty: KPC reported significant material losses, and Iran targeted Kuwait with ballistic missiles again in late May during the latest escalation.

Militia Dynamics

  • PMF/Islamic Resistance halted operations in step with the April ceasefire, and the suspension has broadly held through Day 94. The truce is loose, not clean: a US diplomatic team was reportedly ambushed in Baghdad the day after the ceasefire, and tensions flared again in May.
  • US-Israeli strikes on Iraqi soil have recurred. Reports in May of a covert Israeli desert outpost in western Iraq prompted PMF factions to sweep the Najaf and Karbala deserts (announced May 12) for any IDF presence; Israeli aircraft reportedly struck Iraqi army units near the site.
  • PM Sudani condemned strikes on the PMF as “systematic and repeated aggression” while continuing a year-long push to make Iran-aligned factions disarm and convert to political activity. He is trying to keep Iraq out of the wider war.
  • 100+ PMF killed during the active conflict (Feb 28 to early May), including the Mosul/Tuz Khurmatu strikes (3 killed, Mar 29) and the Habbaniyah base attack in Anbar (7 killed, 13 wounded, Apr 2).
  • Six Gulf nations joint condemnation (Mar 26): Saudi Arabia, UAE, Bahrain, Kuwait, Qatar, Jordan condemned Iranian attacks and those by “armed factions loyal to Iran” from Iraq. Cited UNSC Resolution 2817 and Article 51 self-defense. Called on Iraq to halt proxy militia attacks.
  • PMF factions retain direct IRGC communication channels; IRGC command was decimated during the war, which may loosen central coordination discipline among factions.
  • Key risk: a collapse of the unsigned MoU or another round of US-Israeli strikes could restart PMF attacks on US assets in Iraq or interference with the northern pipeline.
  • KRG-federal tensions add complexity. Turkey terminates the 1973 pipeline agreement effective Jul 27, 2026, with a replacement framework still unresolved.

KRG-Federal Tensions

  • Northern pipeline resumed Sep 2025 after 2.5-year halt under a federal-KRG agreement; ~250K bbl/day was moving as of June, though flows have been intermittent on regional security.
  • KRG delivers crude to SOMO for export via Turkey, retaining a portion for local consumption; international oil companies receive ~$14/bbl after transport deductions.
  • Turkey announced termination of the Iraq-Turkey Crude Oil Pipeline Agreement effective Jul 27, 2026; Ankara has tabled a draft for a broader oil, gas, petrochemicals, and electricity framework, with ~2 months left to reach a deal.
  • If the Turkey deal collapses while Hormuz stays choked, Iraq loses its only working bypass with no southern alternative, the worst-case fiscal outcome of the crisis.

Structural Vulnerabilities

  • Near-total dependence on southern Gulf terminals for export revenue: ~3 months of near-zero southern flows have drained fiscal reserves.
  • No domestic pipeline bypass to the Mediterranean or Red Sea. A proposed ~2.25M bbl/day Basra-Haditha line that would cut Hormuz dependence is years and large capital away, not a crisis tool.
  • Northern route (Ceyhan) capped near ~250K bbl/day and politically fragile (KRG plus Turkey disputes). The pipeline agreement terminates Jul 27, 2026. If it lapses while Hormuz stays choked, Iraq loses its only working bypass.
  • Government budget ~90% oil-dependent; ~3 months of near-zero exports force emergency borrowing and reserve drawdown.
  • Restart lag: ~90 days of stop-start shut-ins compound restart difficulty. Southern fields need weeks to months to bring back online even after Hormuz clears; tank saturation and reservoir-damage risk lengthen the ramp.
  • Storage saturation: ~35.5M barrels of storage against ~4.2M bbl/day capacity means tanks fill in ~25-30 days, forcing full field shutdowns. No domestic tanker fleet to evacuate barrels.
  • Iran-aligned militias: 100+ PMF killed during the war; factions have held a loose ceasefire but recurring US-Israeli strikes on Iraqi soil (and an unsigned MoU) keep a restart of attacks live.
  • Infrastructure concentrated and exposed: ABOT/KAAOT idle; uncleared mines in Hormuz and unrestored insurance prevent vessel access regardless of the paper “reopening.”
  • Medium-term capacity expansion (6M bbl/day target by 2028-2029) now at severe risk from conflict damage and extended shutdowns.

TankerBrief Coverage Angle

Commodity traders, OPEC watchers, Gulf shipping operators, defense and intelligence analysts. On Day 94 they need: whether the unsigned US-Iran MoU is signed and Hormuz mines actually clear (the only path back to southern exports), Basra terminal and field restart sequencing once transits resume (storage saturation and reservoir-damage risk), Ceyhan loadings and the Jul 27 pipeline-agreement expiry plus any replacement framework with Turkey, PMF/Islamic Resistance ceasefire compliance and the risk of renewed strikes on US assets or the northern line, Iraq’s fiscal trajectory under ~3 months of lost revenue (emergency borrowing, IMF/World Bank engagement), OPEC+ quota vs deliverable output through a choked strait, and progress on long-dated bypass options (Basra-Haditha, Sealine 3).