Analysis
An Iraqi oil worker speaks on a radio at an oil refinery in the southern town of Nasiriyah, Iraq October 30, 2015. File photo: AFP
Day after day, oil exports and production in Iraq and the Kurdistan Region continue to experience massive fluctuations, with a sharp downward trend driven by the closure of the Strait of Hormuz and uncertainties surrounding the war involving the US, Israel, and Iran.
During the first days of May, export volumes fluctuated between 330,000 and 680,000 barrels per day (bpd). In the previous month, the average stood at approximately 310,000 bpd. Current production has fallen to 1.6 million bpd, compared to more than 4 million bpd before the war.
Despite the ceasefire between the US and Iran, production and exports in Iraq and the Kurdistan Region have yet to recover to pre-war levels. While output in central and southern Iraq remains disrupted due to limited export outlets, stagnation in the Kurdistan Region is largely attributed to continuing threats from Iraq-based armed groups backed by Iran. As a result, most foreign companies have not resumed oil production.
The persistent uncertainty surrounding the conflict, coupled with the federal government’s inability to control armed groups, has triggered what could be the largest retreat of Iraq’s oil and gas sector in modern history. Dozens of major investment projects have been halted, including fields awarded during the “Fifth-Plus” and “Sixth” licensing rounds. Contracts signed by the Kurdistan Regional Government in Washington in May 2025 for investment in the Miran and Topkhana gas fields have also stalled.
The consequences are becoming increasingly severe as monthly revenues drop toward $1 billion, while Iraq requires 7.63 trillion dinars ($5.8 billion) every month just to cover salaries, pensions, and welfare payments.
Iraqi oil exports in March and April
In April, Iraq’s oil production and exports were roughly half of what they had been in April 2004. According to Iraq Oil Report, exports averaged 310,000 bpd during the month. By comparison, only months after the fall of the Ba’ath regime in 2004, the interim government had managed to restore exports to more than 1 million bpd.
Data from Iraq’s State Organization for Marketing of Oil (SOMO) showed that total exports in March reached 18.6 million barrels, averaging 599,000 bpd — a staggering decline from the more than 3.6 million bpd exported the previous month.
According to the US Energy Information Administration (EIA), Iraq and the Kurdistan Region produced 1.6 million bpd in March, exporting around 599,000 barrels. Of that amount, approximately 41,000 barrels came from Kirkuk fields and 89,000 barrels from the Kurdistan Region.
Exports in early May
On Friday, Iraq and the Kurdistan Region exported a combined 329,000 barrels, rising to 683,000 barrels on Saturday. This suggests that exports during the ceasefire period have actually remained lower than during the war itself, as very few ships carrying Iraqi crude have passed through the Strait of Hormuz since March 8.
Information indicates that of the oil exported through Turkey’s Port of Ceyhan on Friday, around 165,000 bpd came from Kirkuk and the Kurdistan Region — 154,000 from Kirkuk and just 11,000 from the Kurdistan Region. Exports from Basra and central and southern Iraqi fields totaled only 164,000 barrels that day.
Current production is estimated as follows:
- Kurdistan Region: 60,000–80,000 bpd
- Kirkuk, central, and southern Iraq: 1.52–1.62 million bpd
Persistent risks and reliance on a single export route
The drop in exports to below half a million bpd — and even lower on certain days — underscores Iraq’s structural weaknesses: inadequate infrastructure, limited transport capacity, and heavy dependence on a single export route. The Kurdistan-Turkey pipeline and plans to ship oil via Syria have failed to offset the impact of the Strait of Hormuz closure.
On Saturday, Iraq’s deputy oil minister said, “If foreign companies in the Kurdistan Region resume production, we could export half a million barrels daily through the Port of Ceyhan.”
However, the Kurdistan Region is unlikely to return to pre-war production levels anytime soon. Drone attacks by armed groups on oil fields mean that even if preparations begin immediately, it could take nearly two months to restore normal output. For example, the operator of the Sarsang field — targeted by two drones on March 3 — is not expected to return to its pre-war production of 20,000–23,000 bpd before July. Meanwhile, only three ships carried Iraqi oil through the Strait of Hormuz in April.
Financially, the situation remains critical. With 90 percent of state revenues dependent on oil exports, Iraq earned $1.96 billion in March, but revenues plunged to $950 million (1.2 trillion dinars) in April 2026. Given that monthly government expenditures range between eight and nine trillion dinars, current revenues cover only a fraction of total spending.
The crisis highlights the dangers of relying on a single source of income and a single export route: stalled projects, a worsening financial crisis, mounting economic anxiety, and the depletion of reserves to pay salaries.
The incoming Iraqi cabinet led by Ali al-Zaidi — expected to receive parliamentary approval next week — now faces the enormous challenge of reopening export outlets, restoring production to pre-war levels, diversifying revenues, and cutting expenditures, a challenge that more than six Iraqi prime ministers over the past two decades have failed to resolve.
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