Iraq declares force majeure on foreign-run oil fields

BAGHDAD,— Iraq has declared force majeure on all oilfields run by foreign companies after military operations disrupted shipping through the Strait of Hormuz, stopping most of the country’s crude exports, three Iraqi energy officials said.

The Ministry of Oil said in a letter dated March 17 that navigation through the Strait of Hormuz, a key route for about 20% of the world’s oil and liquefied natural gas, has been heavily disrupted.

Most Iraqi crude passes through the Strait, and storage facilities have reached capacity, the letter said.

International oil prices closed at their highest in nearly four years on Friday as the U.S.-Israeli war with Iran intensified.

The ministry’s letter said international partners could not nominate tankers to load crude, preventing exports, even though the state oil company SOMO was ready.

“The ministry ordered a full shutdown of production in affected concession areas, with no compensation under contract terms,” the letter said.

Officials added that the shutdown will be reviewed based on regional developments. The ministry invited companies to urgent talks to set essential operations, staffing, and costs under force majeure conditions.

Iraq’s Oil Minister Hayan Abdel-Ghani said crude production at Basra Oil Company fell to 900,000 barrels per day from 3.3 million barrels per day, according to a ministry statement. Produced oil is being redirected to run refineries, the statement added.

The reduction in output and exports will strain Iraq’s finances, as the country depends on crude for nearly all public spending and more than 90% of government revenue.

The conflict between the U.S. and Israel against Iran has expanded, with Tehran targeting Israel and Gulf states hosting U.S. forces. Israel has also carried out attacks in Lebanon after Hezbollah fired across the border.

(With files from Reuters)