Iraqi Oil Supply Disruptions Threaten Global Markets as 1.5 Million BPD Goes Offline

Key Facts

1Iraq has already begun shutting in production as exports through the Strait of Hormuz become increasingly constrained, with roughly 1.5 million bpd offline.

2The production shut-in could reach 3 million bpd if disruptions persist, representing a massive supply shock.

3China and India together account for roughly two-thirds of Iraqi oil flows, making Iraq a critical supplier for Asia.

Iraq has commenced shutting in significant oil production as export constraints through the Strait of Hormuz intensify. Current estimates indicate that approximately 1.5 million barrels per day (bpd) are already offline, with potential losses reaching 3 million bpd if disruptions persist. This situation represents a massive supply shock to global markets, particularly affecting Asian energy security. China and India together account for roughly two-thirds of Iraqi oil flows, making the country a critical supplier for the region's top economies. The disruption tests OPEC's spare capacity and its ability to compensate for the loss of medium and heavy sour crude grades. If the group fails to fill this gap, global oil prices are expected to spike significantly due to the resulting supply deficit.