Iraq has invoked force majeure on contracts with foreign oil companies operating its fields, as Iran's blockade of the Strait of Hormuz enters its third week. The move affects billions in revenue and underscores how the conflict is disrupting global energy supplies through a waterway that normally handles 21 percent of world oil exports.
According to Reuters, citing industry sources, Baghdad has notified international energy companies including BP, ExxonMobil, and Shell that it cannot fulfill contractual obligations due to the Iranian closure of the strategic waterway. The declaration releases Iraq from legal liability for failing to deliver agreed quantities of oil, but also signals the severity of the economic crisis now gripping Gulf producers.
Iraq exports approximately 3.3 million barrels of oil per day, with the vast majority flowing through the Strait of Hormuz to Asian markets. The Iranian blockade, now in its third week, has effectively halted these shipments, depriving Baghdad of revenue that funds 90 percent of its government budget.
"This is unprecedented in modern Iraqi oil history," said an executive at one of the affected companies, speaking on condition of anonymity. "We're talking about the complete disruption of an export infrastructure built over decades."
The force majeure declaration follows similar moves by other Gulf states grappling with the closure. Kuwait, the United Arab Emirates, and Saudi Arabia face comparable challenges, though Saudi infrastructure includes alternative pipeline routes that bypass the strait.
