Baghdad pulls the plug
Iraq on Thursday declared force majeure on every oilfield operated by foreign companies, the clearest sign yet that the Iran conflict is crippling oil producers who are not even party to the war.
The state oil marketing company SOMO told international partners it could no longer guarantee crude loadings from southern export terminals. Storage tanks at Basra had filled to capacity after weeks of near-zero tanker traffic through the Strait of Hormuz, and Baghdad had nowhere left to put the oil.
Production at the Basra Oil Company crashed from 3.3 million barrels per day to roughly 900,000 bpd almost overnight. The barrels still flowing are being routed to domestic refineries to keep fuel supplies moving inside Iraq, according to oil ministry sources cited by Reuters.
Kuwait hit from the air
Hours after Baghdad's announcement, Iranian drones struck the Mina Al-Ahmadi refinery in Kuwait, sparking fires in several processing units. The Kuwait National Petroleum Company said emergency crews contained the blaze and that no workers were injured, but it shut down parts of the 730,000-bpd facility as a precaution.
A second facility, the Mina Abdullah refinery, was hit by a separate drone wave earlier in the week. Taken together, the strikes mark the first time Iran has targeted Kuwaiti energy infrastructure in the current conflict.
The attacks came one day after Israel bombed Iran's South Pars offshore gas field, an escalation that appeared to trigger Tehran's push to hit Gulf Arab energy sites in retaliation.
Prices jumped on the twin shock
Brent crude settled at $112.19 per barrel on Friday, up 3.3% on the session. WTI gained 2.3% to close at $98.32. Both benchmarks are trading even higher Saturday, with Brent at $112.89 and WTI at $98.23 according to live data.
The Iraq force majeure alone removes roughly 2.4 million barrels a day of export capacity from the market. For context, that is larger than the entire output of Libya and roughly equal to what the 2022 Russian sanctions initially displaced.
Iraq's economy on the line
Crude sales fund more than 90% of Iraq's government revenue. Every day the force majeure holds, Baghdad loses hundreds of millions of dollars. The oil ministry has invited foreign operators, including BP, ExxonMobil, Eni, and Lukoil, to urgent talks on maintaining skeleton staffing and essential well maintenance while exports remain frozen.
India is among the hardest hit importers. Iraq supplies roughly a fifth of India's crude, amounting to about one million barrels a day. With 40 to 55% of India's total oil imports normally transiting the Hormuz chokepoint, New Delhi faces a compounding supply squeeze.
What to watch
Analysts at Citi expect Brent and WTI to climb toward $120 over the next one to three months if disruptions persist. Wall Street forecasters have flagged scenarios as high as $150 to $200 per barrel should the conflict drag on through late April.
The Trump administration on Friday issued a 30-day sanctions waiver allowing the sale of roughly 140 million barrels of Iranian crude already stranded at sea, an attempt to cool prices by, paradoxically, putting Tehran's own oil back on the market. Whether that move gains traction with buyers will shape the next leg of this crisis.