Iraqi oil production has drastically fallen by around 60%, currently producing between 1.7 and 1.8 million barrels per day, down from about 4.3 million barrels before the outbreak of the Iran war. This sharp decrease is attributed to a shortage of tankers needed to transport crude oil, severely impacting Iraq's oil export capacity. Reports suggest that further reductions might be necessary as Iraq seeks to manage storage limitations amid ongoing conflict.

The war has transformed Iraq into the first major Gulf oil-producing nation forced to cut back production, a trend that was later adopted by neighboring countries like the UAE and Kuwait. As part of the measures, Iraq began cutting production by approximately 1.5 million barrels per day, with indications that this could exceed 3 million barrels shortly if the situation does not improve. The decline has also notably affected key oil fields such as Rumaila, which has seen a decrease of around 700,000 barrels daily since the dispute began.

Additionally, the conflict has led to the closure of the Strait of Hormuz, further diminishing the number of tankers available for transporting oil exports. This growing crisis highlights the vulnerability of Iraq's economic stability to external conflicts, posing significant implications for its financial health and regional oil markets as the country navigates through this turbulent period.