Iraqi Oil and Port Activity Slows as Regional Conflict Disrupts Basra

In the southern Iraqi city of Basra, economic activity has sharply declined as the war in the Middle East and Iran’s blockade of the Strait of Hormuz continue to impact oil exports. Local workers and contractors in the oil sector report idleness and pay cuts, with operations at oil fields and the Umm Qasr cargo port significantly reduced.

Maintenance contractor Fawzi told AFP that he has not had any work for a month, noting that salaries were initially cut by 20 percent, then by half, before many were laid off altogether. He now works only 15 days each month. Many trucks in Basra wait idly, either empty or with crude oil yet to be shipped, as exports have decreased substantially.

Previously, Iraq produced around four million barrels of crude oil daily and exported about 3.4 million barrels, mainly through the Strait of Hormuz. After the blockade, onshore storage quickly filled up, forcing Iraq to cut production. This decline has led to significant job losses and reductions in pay for residents who depend on the oil and port industries.

The Iraqi government has attempted to use alternative export routes, such as trucking oil through Syria and a pipeline to Turkiye. However, these channels accommodate only a small portion compared to sea transport. Although there was a rebound in exports in early September after Iran announced an exemption for Iraqi tankers, the oil was reportedly sold at discounted prices. Official figures show Iraq exported an average of 2.6 million barrels per day so far in September.

The turmoil has also resulted in currency instability. The government said foreign reserves have dropped by $20 billion, and authorities have turned to internal borrowing to fund salaries and imports. Economic expert Ali al-Mawlawi told AFP that the recent partial recovery in oil exports has provided only temporary relief to salary payments and warned of continued challenges if the conflict is not resolved soon.

At Umm Qasr port, activity is minimal, with several new wharves vacant and only a handful of vessels docked. State port workers have lost monthly incentives, and electronics vendor Zaid Hadi reported a sharp decline in sales due to rising import costs, lower salaries, and the departure of foreign workers from Basra. Local residents said the community’s heavy reliance on both port and oil activities had left many facing economic hardship as both industries stall.