Iraq Claws Output Back to 1.6m bpd as Hormuz Crisis Eases

Iraq Claws Output Back to 1.6m bpd as Hormuz Crisis Eases Baghdad has restarted West Qurna 1, Majnoon and Fauqi, but national production sits at roughly a third of pre-war levels after a 97% export collapse. Iraq has restarted production at some of its most important oil fields, including West Qurna 1, Majnoon and Fauqi, lifting national output back to roughly 1.5 to 1.6 million barrels per day, IraqiNews reported on Wednesday (2026-06-03). The rebound follows three months of paralysis triggered by the closure of the Strait of Hormuz.⁷ That matters because Iraq was the second-largest producer in OPEC before the regional war, and its disappearance from seaborne markets removed a structural pillar of Gulf supply. Output had dropped from 4.18 million bpd in February to 1.67 million bpd by April, IraqiNews reported, one of the steepest national declines on record.⁷ The scale of the collapse is hard to overstate. Iraq's seaborne crude exports fell by more than 97% in May, to just 96,000 bpd against 3.32 million bpd in the same month a year earlier, according to the same report. The country had entered 2026 shipping more than 3.3 million bpd in both January and February.⁷ More than 90% of Iraq's oil exports traditionally move through the Persian Gulf, leaving Baghdad acutely exposed when Hormuz shut.⁷ The strait is the world's most important oil chokepoint, with flows averaging around 20 million barrels per day in 2025, according to the IEA, and 21 million bpd back in 2022, per the EIA.^1,4 The fiscal damage was immediate. Oil revenues fell by roughly $5 billion from pre-war levels, a severe shock for a government that depends on crude for about 90% of its budget.⁷ That dependency forced Baghdad to prioritise domestic energy security over export volumes during the worst of the disruption, which is part of why the restart has been slow.⁷ The current rebound to 1.5 to 1.6 million bpd still leaves Iraq far below the more than 4 million bpd it pumped before the conflict.⁷ In other words, the fields are coming back, but the export engine is not yet reconnected at scale. Restarting wells is one thing. Moving barrels to tidewater through a still-contested chokepoint is another. The Hormuz disruption was not cheap for the wider Gulf either. More than 1 billion barrels of oil have been lost to the strait's closure, ADNOC chief executive Sultan Ahmed Al Jaber said on Wednesday (2026-05-20), with nearly 100 million additional barrels lost every week it stays shut.² Those figures frame how much latent supply is waiting to return once transit normalises. Producers are racing to build around the bottleneck. The UAE has completed nearly half of a second pipeline designed to bypass Hormuz and route more crude to Fujairah, Al Jaber said, and Abu Dhabi has moved to accelerate the project to double export capacity through the port by 2027.^2,3 For now the UAE is leaning on an existing line to Fujairah with a ceiling of 1.8 million bpd.² Iraq has no comparable workaround, which is why its recovery hinges almost entirely on the Gulf route reopening. The signs of thaw are tentative. Three supertankers carrying a combined 6 million barrels of Middle East crude exited Hormuz on Wednesday (2026-05-20) after being stranded inside the Persian Gulf for more than two months, Reuters reported.⁶ Some vessels left with their trackers switched off, according to Kpler and LSEG data, a sign that owners still feared Iranian attacks even as traffic resumed.⁵ The price read is murky. Aggregate signals across the packet tilt bearish, weighted toward the supply returning as Iraqi and stranded Gulf barrels come back online. Yet a contrarian bid persists in ICE Brent crude front-month, where supply-driven and demand-driven signals both point higher, reflecting the risk premium that lingers while the chokepoint stays fragile.¹ The disagreement is rational. If Iraqi fields ramp and the stranded tanker backlog clears, the market faces a wave of deferred supply that argues for lower prices. If Hormuz seizes again, the same barrels vanish overnight and the premium snaps back. The next signal to watch is whether Iraq's restarted output actually converts into rising seaborne loadings, or whether it stalls at the wellhead while Baghdad keeps barrels at home. Watch the Basra export tallies, not the production headline.