Drone Attacks Slash Kurdistan Oil Output, Halt Key Fields

Drone attacks on oilfields in Iraq's semi-autonomous Kurdistan region have forced the suspension of production at multiple sites, cutting output by approximately 140,000 to 200,000 barrels per day. These attacks have targeted fields operated by foreign companies including HKN Energy, Gulf Keystone Petroleum, DNO, and Hunt Oil Company, causing significant infrastructure damage but no reported casualties. The Sarsang oilfield, operated by U.S.-based HKN Energy, was notably impacted just hours before the company signed a preliminary agreement to develop another oilfield in northern Iraq. Initial investigations suggest the drones originated from areas controlled by Iran-backed militias, though no group has claimed responsibility. The attacks exacerbate tensions between the Kurdistan regional government and Baghdad over control of oil exports and revenue distribution, with recent agreements aiming to resume exports under Baghdad’s oversight. Despite these disruptions, refinery margins remain supported by tight middle distillate markets and OPEC+ supply increases, while US natural gas storage levels are above the five-year average.