Oil Ministry blames foreign company withdrawal and record consumption for fuel shortage

BAGHDAD — Iraq’s Oil Ministry on Thursday attributed the country’s gasoline shortage to the withdrawal of a foreign company from a key refinery project in southern Iraq over security concerns, compounded by record domestic consumption.

The ministry said the departure of the company responsible for implementing the Fluid Catalytic Cracking unit at southern refineries resulted in the loss of between 4 million and 5 million liters per day of high-octane gasoline production. Daily production has remained at its usual level of 30 million liters, the ministry said, but consumption has surged during the Eid holiday period and religious pilgrimage occasions, reaching approximately 35 million liters on Wednesday — exceeding all previous records, which had never surpassed 32 million liters per day. The gap between production and consumption has reached around 4 million liters per day, with refineries operating at maximum capacity and authorities covering demand through available stocks.

The regional war between Iran, Israel and the United States contributed to the security environment that prompted the foreign company’s withdrawal. The conflict repeatedly forced Iraq to close its airspace, brought drone attacks on military installations and generated repeated threats to oil infrastructure, placing additional pressure on the country’s energy sector.

The shortage also follows months of disruption to foreign oil companies operating in the Kurdistan Region, where facilities have been repeatedly targeted by rockets and drones since February. On Wednesday, Prime Minister Ali al-Zaidi met a delegation from Erbil in the presence of the army chief of staff and ordered measures to protect the region’s petroleum sector and facilitate the return of foreign oil companies beginning Thursday.

As long lines formed at fuel stations, the General Traffic Directorate called on motorists to follow traffic regulations while refueling, including using designated entry and exit routes and cooperating with traffic patrols.

The ministry’s explanation contradicts a string of recent official reassurances. On May 27, Oil Ministry spokesperson Sahib al-Bazoun said Iraq was not facing a shortage, citing strategic reserves of around 100 million liters. On Wednesday, Hussein Talib, head of the state-owned Oil Products Distribution Company, described congestion as a temporary distribution problem and said it would be resolved within four days, calling the situation “a message of reassurance to citizens not to be drawn in by rumors.”