Iraqi oil production from key southern fields has dropped about 70% to roughly 1.3 million barrels per day because exports through the Strait of Hormuz have been halted by the conflict with Iran, according to three industry sources on Sunday.
Production from the fields stood at around 4.3 million bpd before the war.
"Crude storage has reached maximum capacity and the remaining output after the major cut will be used to supply the country's refineries," said an official with the state-run Basra Oil Company (BOC), which manages production and export operations from the southern fields.
The Strait of Hormuz is one of the world's key oil transit chokepoints, carrying roughly a fifth of global oil and liquefied natural gas flows.
The OPEC member's exports also fell sharply to an average of around 800,000 barrels per day on Sunday, with only two tankers loading because vessels cannot move freely through the strait to Iraq's southern terminals, the source said.
The two tankers, Cospearl Lake and Yuan Hua Hu, each completed loading about 2 million barrels of crude at around 8 p.m. local time (1700 GMT), and with no new vessels arriving, oil flows from Iraq's southern export terminals were halted, three oil officials and a shipping agent told Reuters.
Iraq's oil exports from the southern oilfields stood at 3.334 million barrels per day in February, an oil ministry document showed.
A drop in Iraq's oil production and exports is set to strain the country's already fragile finances, as the state relies on crude sales for nearly all public spending and more than 90% of its income.
"This is the most serious operational threat Iraq has faced in more than 20 years," a senior Iraqi oil ministry official said.
