Iraq Declares Force Majeure on Foreign-Operated Oilfields Over Hormuz Disruption

Iraq has declared force majeure on all oilfields developed by foreign oil companies due to severe disruptions in navigation through the Strait of Hormuz.

“Home News Business Energy Opinion Lifestyle Sports Video Podcast Home News Business Energy Opinion Lifestyle Sports Video Podcast Close the sidebar Home Business Energy A foreign tanker carrying Iraqi fuel oil damaged after catching fire in Iraq's territorial waters, following unidentified attacks that targeted two foreign tankers, according to Iraqi port officials, near Basra, Iraq, March 12, 2026”

Al Arabiya English

This declaration has effectively halted most of the country's crude exports, according to multiple energy officials with direct knowledge.

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The unprecedented military activity in the region has prevented international partners from nominating tankers to lift crude shipments.

The state oil company SOMO remains ready to load shipments but faces insurmountable logistical challenges.

This legal declaration excuses parties from fulfilling obligations due to 'superior force' including war, hostilities, or military actions.

The force majeure declaration has resulted in significant production cuts across Iraq's oil industry.

Crude production at Basra Oil Company has been slashed from 3.3 million barrels per day (bpd) to just 900,000 bpd.

Middle East Eye

Iraqi Oil Minister Hayan Abdel-Ghani confirmed these dramatic production figures.

The ministry has ordered a full shutdown of production at affected concession areas.

No compensation will be provided under existing contract terms for the production halt.

The remaining production is being pumped to operate domestic refineries rather than for export.

The dramatic reduction in oil exports represents a severe financial crisis for Iraq.

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Iraqi News

Iraq relies on crude sales for nearly all public spending and more than 90 percent of its national income.

The halt in exports has caused storage capacity to reach its limits.

This creates immense logistical and economic challenges for the oil-dependent economy.

Energy ministry officials will review the situation periodically depending on regional developments.

The immediate impact threatens Iraq's already fragile financial stability.

Long-term consequences may affect economic recovery and development programs dependent on oil revenues.

The oil disruption in Iraq is directly connected to the broader regional conflict.

The conflict has escalated beyond Iran's borders.

Middle East Eye

Tehran has responded to attacks by hitting Israel and Gulf states hosting US military installations.

The Strait of Hormuz serves as a critical chokepoint for approximately 20 percent of global oil and liquefied natural gas supplies.

Military operations have disrupted normal commercial navigation throughout the region.

Countries are declaring emergency measures like force majeure clauses to protect contractual obligations during wartime conditions.

The market reaction to Iraq's force majeure declaration has been immediate and severe.

“Home News Business Energy Opinion Lifestyle Sports Video Podcast Home News Business Energy Opinion Lifestyle Sports Video Podcast Close the sidebar Home Business Energy A foreign tanker carrying Iraqi fuel oil damaged after catching fire in Iraq's territorial waters, following unidentified attacks that targeted two foreign tankers, according to Iraqi port officials, near Basra, Iraq, March 12, 2026”

Al Arabiya English

International oil prices have surged to their highest levels in nearly four years.

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Brent crude futures rose 3.26%, or $3.54, to close at $112.19 per barrel on Friday.

U.S. crude oil gained 2.27%, or $2.18, to settle at $98.32 per barrel.

Drones struck two refineries in Kuwait, further exacerbating market concerns.

The combination of Iraq's export halt and Kuwait refinery attacks has created significant uncertainty.

Analysts warn the situation could deteriorate further if the military conflict continues to escalate.