Iraq in crisis over petrol shortage

• Oil ministry confirms scarcity
• Daily consumption up during Eid
• Foreign oil companies retreat

Iraq is suffering from a severe shortage of petrol after the withdrawal of foreign partners from key oil refineries during the Iran war sharply depressed output capacity.

The country’s oil ministry said in a statement on Wednesday that there is a petrol crisis, following weeks of long queues at filling stations and calls to tackle the problem.

Iraq controls the world’s fifth-largest recoverable crude deposits and has the second-largest Arab refining capacity after Saudi Arabia, standing at around 1.3 million barrels per day. It also sells petrol at one of the world’s cheapest levels.

“The ministry has consistently worked to provide all types of petroleum products (gasoline, diesel and kerosene) for domestic consumption. However, the events that have swept the region and their impact on the oil industry, including those related to the supply of petroleum products, have had a significant impact,” the ministry said.

“The withdrawal of the foreign company responsible for implementing the fluid catalytic cracking (FCC) unit at the southern refineries, due to security concerns, resulted in a loss of 4-5 million litres of high-octane gasoline.”

The loss was compounded by a surge in daily domestic consumption due to the Eid holidays and religious pilgrimages, the ministry said.

Despite maintaining the usual production of 30 million litres of gasoline per day, consumption has increased to about 34 million litres per day, it added.

Several foreign oil companies have pulled out or sharply curbed operations in Iraq following repeated Iranian missile and drone attacks during Iran’s conflict with the US and Israel.

• Iraq urgently needs to find ways of getting its oil to market
• Iraq targets tripling its pipeline oil exports
• Investors back Iraq’s long‑term potential

Iran’s closure of the Strait of Hormuz, through which a fifth of the world’s oil used to transit, has also depressed Iraq’s oil exports to around a third of their pre-war level of 3.4 million bpd, prompting the Opec member to step up plans to boost export capacity via Turkey.

Experts believe Iraq needs several weeks to restore oil and refining capacity to pre-war levels after storage facilities were filled due to the drop in exports through Hormuz.

“Restoring a field’s capacity, especially those in southern Iraq, necessitates huge funds and an agreement between the oil ministry and an operating international company,” said Walid Khadduri, former information chief at the Kuwait-based Organization of Arab Petroleum Exporting Countries.