March 3, 2026, Iraq officially began a progressive shutdown of the

Rumaila oil field

, the world's second-largest oil field, in response to the closure of the Strait of Hormuz. The Iraqi Oil Ministry ordered a 100% reduction in production at South Rumaila effective 15:00 local time (12:00 GMT) as regional military escalations have rendered maritime exports through the Persian Gulf impossible.

Key Developments in Iraq's Oil Sector

  • Rumaila and West Qurna 2 Shutdowns: Iraq has begun closing both Rumaila and the West Qurna 2 project. As of Tuesday, approximately 1.2 million barrels per day (bpd) of output have gone offline, including a 700,000 bpd cut at Rumaila and a 460,000 bpd cut at West Qurna 2.

  • Reason for Closure: The primary driver is a lack of storage capacity. With the Strait of Hormuz blocked, tankers cannot leave the Persian Gulf, causing onshore storage tanks to reach critical levels.

  • Potential for Further Cuts: Iraq, OPEC's second-largest producer, warned it may be forced to shutter up to 3 million barrels per day—roughly two-thirds of its total output—if the Hormuz crisis persists.

  • Infrastructure Protection: Iraqi army units, supported by armored vehicles, have been deployed around critical infrastructure west of Basra to safeguard oil fields amid rising regional tensions.

The Strait of Hormuz Crisis

  • Official Closure: Iran's Revolutionary Guard Corps (IRGC) officially declared the Strait of Hormuz closed on March 2, 2026, following joint U.S. and Israeli airstrikes on Iranian targets.

  • Military Threats: Iranian officials have vowed to "set ablaze" any vessel attempting to pass through the waterway, which typically handles 20% of the world's daily oil supply and significant volumes of liquefied natural gas (LNG).

  • Global Shipping Impact: Over 150 ships, including more than 100 crude tankers, are reportedly anchored outside the strait. Major shipping companies like Maersk and Hapag-Lloyd have suspended transits through the region.

Economic and Market Impact

  • Surge in Energy Prices: Brent crude oil prices rose nearly 8% on Tuesday to above $83 per barrel, while European gas prices surged by as much as 40%. Analysts warn that a prolonged closure could push oil prices toward or above $100 per barrel.

  • Regional Production Halts: Beyond Iraq, Qatar has suspended LNG production at some facilities following drone strikes, and Saudi Arabia has shut down the Ras Tanura refinery due to similar incidents.

  • Supply Chain Disruptions: The closure is forcing tankers to take costly detours around the Cape of Good Hope, adding weeks to transit times and significantly increasing shipping costs and insurance premiums.

Would you like me to look into the specific impact this shutdown is having on global stock markets or the current status of oil storage in other Gulf nations?

Iraq Starts Massive Oil Cuts as Hormuz Tensions Fill Storage