Iraq may cut oil production if tankers can’t sail Strait of Hormuz
March 4, 2026
Prices eased back after President Trump said he had asked the DOJ to provide reasonable insurance for ships passing through the Strait of Hormuz. He also said the US Navy would escort ships through strait if necessary. This news pulled prices off the highs, but we are far away from the ongoing conflict, losing its grip on the markets, and prices still have plenty of room to run higher, barring some major de-escalation.
The API called crude inventories up 5.6 million barrels, gasoline down 3.3 million and displays up 516,000.
The average estimates for today DOE inventory update from the Bloomberg survey is for crude to be up 2.863 million barrels, gasoline down 1.258 million, and distillates down 2.179 million.
Yesterday the US ordered non-emergency government personnel and their family members to leave the United Arab Emirates, Qatar, Kuwait, Bahrain, Iraq, and Jordan and closed several diplomatic missions across the region as tensions with Iran escalated.
Two Iraqi officials said Iraq may be forced to cut its oil production by more than 3 million bpd in a few days if oil tankers cannot move freely through the Strait of Hormuz.
The energy markets rallied higher overnight and have now pulled back off those highs after the few days of massive upside the market has seen a day of softness that is likely needed to relieve the pressure built up in the market. After President Trump’s news to assist in keeping traffic flowing through the Strait of Hormuz the market saw this as a good opportunity to take some profits, and prices could settle into a range here in the near term but this is problematic with all that is taking place in the world and the abundance of headlines that could spook prices again.
Shipping industry people say that Trump’s pledge to keep maritime traffic flowing through the Strait of Hormuz is only a partial fix.