JPA Iraq Intelligence — INTSUM Issue 11 | Force Majeure Declared, Oil Production at 900k bpd | March 2026

CONTEXT — Iraq Operating Environment | Week Ending 22 March 2026

IRCI Level: CRITICAL — Force Majeure Active, Energy Exports Halted

Iraq this week crossed the most significant corporate threshold of the current conflict cycle: on 17 March, the Iraqi Oil Ministry formally declared force majeure on all foreign-operated oilfields, citing the obstruction of the Strait of Hormuz and the complete halt of crude exports from southern ports. This is not a precautionary measure — it is a contractual declaration with direct implications for every energy company with Iraq operations.

RISK

ENERGY SECTOR — HARD DATA

Basra output has been cut from 3.3 million barrels per day to 900,000 bpd — a 73% reduction. Storage capacity at southern terminals has reached its limit; SOMO (State Oil Marketing Organisation) was prepared to load shipments but found no tankers willing to operate under current war-risk conditions. The force majeure letter explicitly states that no compensation will be provided under contract stipulations, and mandates a complete production cessation in affected concession areas. Companies are required to urgently assess necessary operations, costs and minimum staffing under force majeure conditions.​

On 5 March, a drone strike on HKN Energy's Sarsang field in Iraqi Kurdistan — attributed to Iran-aligned militias — halted production at a 30,000 bpd US-operated field. Kurdish authorities confirmed the attack was carried out by two drones targeting the power unit. Multiple other foreign energy companies halted production as a precautionary measure. Iran-aligned militia groups have explicitly vowed to expand targeting from US military bases to US energy interests across Iraq. ExxonMobil and Chevron's planned upstream entry into Iraq is now materially complicated.

SECURITY ENVIRONMENT

The US Embassy Baghdad has issued a formal departure order for non-emergency personnel and is advising all US citizens to leave Iraq immediately. Eight overnight attacks targeted the US diplomatic and logistics centre at Baghdad International Airport in a single night. The International Zone remains under restricted access. Iran-aligned militia groups are conducting daily drone and rocket attacks across Baghdad, Erbil and the southern energy corridor.

LEGAL AND CONTRACTUAL EXPOSURE

The force majeure declaration creates an immediate legal obligation for all operators: assess whether the declaration is valid under your specific contract terms, determine minimum staffing and operational requirements, and document all decisions for post-crisis recovery claims. The oil ministry's letter specifies "no compensation" under force majeure clauses — this will be contested in arbitration by multiple operators. Companies without Iraq-specific force majeure protocols in place are operating with a documented legal exposure

IMPLICATION FOR ORGANISATIONS

Iraq is in full force majeure status. This is a contingency management phase, not a business-as-usual period. Three immediate corporate priorities: (1) Activate your Iraq force majeure legal review — document all decisions now for future arbitration positioning. (2) Assess personnel duty-of-care obligations against Level 4 Do Not Travel status — insurance and liability exposure is live. (3) Model your Iraq revenue assumptions against a 60–90 day zero-export scenario, with partial recovery only post-Gulf de-escalation. Iraq's energy fundamentals are unchanged — this is a temporary but severe disruption. The companies that document well now will be positioned to recover fastest.
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Published by Jose Parejo & Associates, JPA Structural Analysis Unit | 20 March 2026
Classification: Executive Summary — Unrestricted Distribution

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