Iraq has declared force majeure on all oil fields operated by foreign companies, invoking a legal clause that allows it to suspend contractual obligations because war-related disruptions have made it impossible to export crude, two oil ministry sources told Reuters on March 20.

In this case, force majeure means Iraq and its foreign partners are temporarily freed from meeting production and delivery commitments under their contracts, as military activity has effectively blocked the country from shipping oil through normal channels.

The declaration follows escalating military operations in the region that have disrupted navigation through the Strait of Hormuz, the narrow waterway between Iran and Oman through which roughly a fifth of global oil supply passes.

Oil ministry sources told Reuters that the disruption has prevented most Iraqi crude exports from moving, cutting off the country’s primary revenue stream and forcing officials to take emergency contractual measures.

The Strait of Hormuz has become increasingly volatile in recent days amid rising tensions involving Iran and its regional adversaries, with reports of naval incidents, threats to commercial shipping, and heightened military presence.

Shipping companies and insurers have responded by sharply reducing traffic through the corridor, with some vessels rerouting or halting operations altogether due to security risks and soaring insurance costs.

Iraq, OPEC’s second-largest producer, depends heavily on southern export terminals that feed into the Persian Gulf and transit through Hormuz, leaving it particularly exposed to any disruption in the chokepoint.

The move also reflects a broader pattern of conflict spilling into energy infrastructure, as fighting across Iraq and neighboring Syria increasingly targets oil-producing areas controlled by a mix of state forces, militias, and foreign-backed groups.

U.S. officials have accused Iran-backed militias of launching drone and rocket attacks on energy facilities in northern Iraq, while Iraqi forces have stepped up deployments to secure major oil fields and prevent sabotage.

Kurdish-operated oil fields in northern Iraq have also faced intermittent shutdowns due to both security threats and ongoing disputes with Baghdad over control and revenue sharing, further tightening supply.

The current crisis adds to earlier export constraints, including the prolonged closure of the Iraq-Turkey pipeline, which had already reduced flows to global markets by hundreds of thousands of barrels per day.

Energy analysts say a sustained disruption in Hormuz could trigger sharp price increases worldwide and deepen supply shortages, particularly given limited alternative export routes for Gulf producers.

By declaring force majeure, Iraqi officials are signaling that the situation is beyond their control and unlikely to be resolved quickly, raising the prospect of prolonged export losses as long as the conflict continues to threaten maritime transit.