Iraqi Prime Minister Mustafa Al Kadhimi said on Tuesday that his Cabinet has been working for "months" to address high unemployment as dozens of protesters took to the streets to vent their frustration.
Groups of angry men blocked the entrance to the Nasiriyah oil refinery in southern Iraq for the fifth day in a row, stopping production at the 30,000 barrel per day facility.
The blockade caused fuel shortages across the southern province of Dhi Qar, with many petrol stations running dry and long queues at the few stations that were still open.
In an attempt to quell public anger, Mr Al Kadhimi said "We have worked for months to address the crisis and the demands of our people in Nasiriyah."
The government has allocated a special fund for the reconstruction of Dhi Qar.
"We hope that its money will be spent in a way that serves our people in the governorate," he said.
More than 200 unemployed university graduates have staged a weeks-long sit-in outside the refinery to demand jobs.
The demonstrators have blocked the entrance and prevented employees from entering the site.
The province was unable to produce and refine crude oil and oil derivatives after the refinery's closure, which has a maximum production capacity of 30,000 barrels per day, the refinery said in a statement.
This "will cause fuel scarcity in the province... if the closure continues the movement of cars will stop completely," the statement added.
The prime minister said his government will appoint an advisory council in Nasiriyah, linked to his office which will follow up on the developments of Dhi Qar on a daily basis.
"I'm appealing to the people in Dhi Qar to put their support with the local government, and we will cooperate to advance the governorate," he said.
Nearly 600 people, mostly unarmed demonstrators but also some members of the security forces, have been killed since popular unrest began on October 1, 2019, with both security forces and unidentified gunmen shooting people dead.
Protesters, most of them young, are demanding an overhaul of a political system they see as profoundly corrupt and keeping most Iraqis in poverty. They are calling for better public services and employment opportunities.
It was hoped that such opportunities, or at least signs of reform, would come into fruition through the 2020 budget.
But the Covid-19 pandemic and worsening political deadlock in Iraq's highly fractured parliament meant that the 2020 budget was delayed.
The Iraqi parliament passed its budget for 2020 on Wednesday, the longest wait for a national budget in post 2003 Iraqi history.