Shafaq News- Baghdad

Iraq joined an emergency meeting of the OPEC+ alliance on Sunday as escalating military tensions in the Gulf disrupted shipping through the Strait of Hormuz, a critical artery for global energy markets that carries roughly one-fifth of the world’s daily oil consumption.

The meeting comes amid growing fears that the confrontation involving Iran, the United States, and Israel could trigger wider disruptions to oil supplies, forcing producers to consider raising output to stabilize global markets.

Iraq is participating in the urgent consultations as one of the eight key OPEC+ members responsible for production adjustments, alongside Saudi Arabia, Russia, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman.

Delegates are expected to examine a potential production increase of 411,000 barrels per day (bpd) or more, significantly above earlier projections of around 137,000 bpd, according to industry reports.

Oil prices have already climbed to around $73 per barrel, their highest level since July, driven by concerns that the conflict could expand across the Middle East and further disrupt shipments through the Strait of Hormuz. The narrow waterway handles more than 20% of global oil trade, making it one of the most strategically important chokepoints in the world energy system.

Analysts note that the bulk of the spare capacity capable of significantly increasing supply remains concentrated in Saudi Arabia and the United Arab Emirates, potentially limiting the broader impact of production increases by other producers.

OPEC+ had previously raised production quotas by approximately 2.9 million bpd between April and December 2025, before pausing the increases early in 2026 due to weaker seasonal demand.

For Iraq, higher oil prices could translate into increased revenue if exports remain uninterrupted. However, the country remains highly vulnerable to disruptions in Gulf shipping lanes.

The government is closely monitoring developments around the Strait of Hormuz as several international shipping companies suspend operations in the area, raising concerns about supply chain disruptions. Iraq is among the region’s major crude exporters to Asian markets, which import roughly two-thirds of their oil from the Gulf region. Japan relies on the Middle East for about 90% of its oil imports, while roughly half of China’s crude imports originate from the region.

In response to rising risks, several Asian governments and energy firms have begun reassessing supply options and strategic reserves.

Japanese shipping companies have suspended operations near the strait, while India -the world’s second-largest oil importer- said its state-run refineries are evaluating alternative sources of crude, noting that existing reserves could cover roughly 20 days of demand.

South Korea has also convened emergency consultations and indicated it could release oil from strategic reserves if supply disruptions persist, adding that current stockpiles could support domestic demand for several months.

In Baghdad, the Iraqi Oil Ministry convened an emergency meeting today chaired by Oil Minister Hayan Abdul-Ghani, bringing together senior officials responsible for export operations to evaluate contingency plans.

A government source told Shafaq News that the meeting focused on ensuring the continuity of Iraqi oil exports to global markets amid the escalating regional conflict.

The discussions were prompted by Iran’s announcement that the Strait of Hormuz had been closed to commercial shipping following the intensifying military confrontation. Officials reviewed mechanisms to maintain export flows and mitigate potential disruptions should the conflict persist for an extended period.

According to maritime tracking data, more than 150 oil and gas tankers are currently waiting in Gulf waters outside the Strait of Hormuz as tensions escalate. Commercial vessels on both sides of the strait have largely halted movement, with the exception of Iranian and Chinese naval ships operating in the area.

European maritime security mission Aspides reported that vessels in the region had received radio messages warning that navigation through the strait was no longer permitted.

In parallel, several major oil trading firms and shipping companies have suspended shipments through the corridor amid ongoing military strikes and rising insurance risks.

Insurance providers covering war risks have also warned shipowners that policies for vessels transiting the strait may be cancelled or sharply repriced.

According to the Financial Times, insurance premiums could rise by as much as 50%. Dylan Mortimer, head of war-risk hull insurance at brokerage Marsh, said premiums that previously stood at roughly 0.25% of a vessel’s value could climb significantly.

For a tanker valued at $100 million, insurance costs for a single voyage could increase from around $250,000 to $375,000.

Risk consultancy EOS Risk Group also reported that several ships had received warning messages from Iran’s Revolutionary Guard stating the waterway was closed, prompting at least three vessels to abandon plans to transit the strait.

The disruption intensified after Iranian state television reported that an oil tanker attempting to pass through the strait without complying with Iranian warnings had been targeted. According to the broadcaster, the tanker was struck and later reported to be sinking, though independent confirmation has not yet emerged.

Earlier, Iranian military officials announced that the Strait of Hormuz had been closed and warned vessels that the route was unsafe amid ongoing military exchanges with the United States and Israel.

Economists warn that a prolonged closure of the strait could deal a severe blow to Iraq’s economy. Iraqi economic expert Nabil Al-Mirsoumi told Shafaq News that roughly 94% of Iraq’s oil exports pass through southern Gulf terminals, meaning any sustained disruption could sharply reduce national revenues.

He estimated that monthly oil income -currently around $7 billion- could drop to less than $1 billion if exports through the Gulf were halted.

Alternative export routes remain limited. Iraq can currently ship only about 210,000 barrels per day via the Turkish port of Ceyhan, in addition to small volumes transported by truck to Jordan.

Such levels would fall far short of covering government spending obligations, including salaries for the country’s vast public sector.

A prolonged export halt could also force Iraq to cut production dramatically, potentially to around one million bpd, which could damage reservoir pressure and reduce long-term production capacity.

The economic impact could extend beyond the oil sector. Lower crude production would reduce associated gas output used to fuel power plants, potentially worsening electricity shortages across the country.

Read more: Iraq braces for financial meltdown amid Hormuz closing threats