Iraq is preparing to boost oil exports from its southern ports, with a formal deal to open the Strait of Hormuz scheduled for Friday. Oil Ministry spokesman Salim Al-Rikabi stated that Iraq is taking necessary steps for exports to resume "as soon as maritime navigation returns to normal" and is in the process of "nominating tankers to load Iraqi crude oil." The country aims to restore production to over 3 million barrels per day within two months.
Oil production in southern Iraq, the country's production heartland, has already jumped from approximately 900,000 to 1 million barrels per day to about 1.5 million to 1.6 million barrels per day. This increase is attributed to the arrival of tankers, which frees up space in storage tanks for more exports. Basim Abdul Kareem, director general of Basra Oil Cop, confirmed this rise.
The broader context is the signing of a memorandum of understanding (MOU) for peace between the United States and Iran, which has prompted Middle Eastern oil producers to accelerate production and exports. The Strait of Hormuz, a critical passage for global crude oil and liquefied natural gas shipments that was disrupted by maritime blockades, is expected to see gradually increasing traffic. Major producers like Saudi Arabia, the UAE, and Iraq are preparing to increase their previously reduced shipping volumes.
Iraqi Oil Minister Basim Mohammed stated that the country's oil fields are ready to resume production, though the return to normal output levels will be gradual. State oil marketer SOMO has contacted customers to nominate tankers for loading Iraqi crude oil cargoes from southern ports. While the goal is to restore production to more than 3 million barrels per day within one to two months, a fixed timeline for full export recovery is not available due to varying reservoir conditions and field capacities.
Challenges remain, including the need to clear sea mines, confirm safe shipping routes, reposition tankers, and address elevated insurance costs. Repairs to damaged refineries and pipelines are also necessary. A shortage of vessels and high transportation costs could also persist, as tankers that avoided the Gulf region would need large-scale repositioning to restore supply networks. However, the stabilization of transport could alleviate procurement burdens for Asian markets, which are highly dependent on Middle Eastern oil and have been significantly affected by supply disruptions and price volatility. International oil prices could decline as a result of increased supply.
