Iraq has warned big western oil groups they are likely to have to cut spending on its southern oilfields in the coming year after a collapse in international prices that has left Baghdad with less revenue to pay them. In a letter seen by the Financial Times, and sent to companies including ExxonMobil, Royal Dutch Shell, BP and Italy’s Eni, the country’s oil ministry says that the government “has sharply reduced the funds available” to it and that this will lead to “corresponding reductions of spending within the ministry”. It is the latest evidence of how some of Opec’s biggest members are suffering the effects of the crude price plunge, from more than $115 a barrel last summer to less than $50 now, and paring back budgets in response. Iraq has been hit especially hard by the market slide. Its battle against militants from Islamic State of Iraq and the Levant, which controls large areas of the north and west of the country, is draining its finances. That, combined with reduced proceeds from crude sales, means it is struggling to reimburse western oil companies for their spending under so-called service contracts.