Iraq and Syria agree to revive pipeline bypassing Strait of Hormuz
The planned restoration would reopen a 700,000 bpd route from northern Iraq to Syria’s Mediterranean coast, reducing Baghdad’s reliance on Basra exports.
By Amanda Ross · Deals Correspondent
· 3 min read
Iraq and Syria signed an agreement on Friday to rebuild an oil pipeline that would give Baghdad a route to market outside the Strait of Hormuz, a chokepoint disrupted during the U.S.-Iran war. The line has a nameplate capacity of 700,000 barrels per day, according to the U.S. Energy Information Administration, and would connect Iraq’s northern oil hub of Kirkuk with Syria’s Mediterranean coast.
The agreement was signed in Washington at a Chamber of Commerce summit focused on U.S. investment in Iraq. U.S. Energy Secretary Chris Wright presided as Basra Oil Company Chief Executive Bassem Abdul Karim Nasr and Syrian Petroleum Company Chief Executive Youssef Qablawi signed the document, CNBC reported.
Wright said before the signing that Iraq had room to lift output, cut reliance on hostile neighbors and support “freedom, prosperity and abundant energy” in the country. Iraqi Prime Minister Ali al-Zaidi was in the United States this week and met President Donald Trump at the White House on Tuesday, according to CNBC.
A route around a vulnerable chokepoint
The pipeline would move crude westward from northern Iraq to the Mediterranean, allowing cargoes to be loaded away from the Persian Gulf. That matters for Iraq because its export system now depends heavily on Basra, the southern port city on the Gulf, while its pipeline options remain limited.
Oil shipped from Basra must pass through the Strait of Hormuz to reach many global buyers. Disruption in that narrow waterway has hit Iraq hard, CNBC reported, as tanker flows have been affected by the U.S.-Iran conflict.
The Kirkuk-to-Syria line has been out of service since it was damaged during the U.S. invasion of Iraq in 2003, according to the EIA. Restoring it would not add production by itself, but it would create export capacity outside the Gulf if the physical repairs, commercial terms and security conditions allow sustained operations.
Iraq is the second-largest producer in OPEC. Its crude output fell by more than half to about 1.9 million barrels per day in June from roughly 4.2 million barrels per day in February, before the United States and Israel attacked Iran, according to OPEC data cited by CNBC.
Regional pipeline plans gather pace
Other Gulf producers are also looking for export routes that reduce exposure to Hormuz. The United Arab Emirates is building a second pipeline to Fujairah, on the Gulf of Oman, a project that would double its export capacity outside the strait, CNBC reported.
Saudi Arabia is weighing an expansion of its pipeline to the Red Sea by 2 million barrels per day, Reuters reported last week, citing people close to the matter.
Energy analysts have warned that pipelines can lower dependence on a single shipping lane without eliminating regional security risks. Bob McNally, founder of Rapidan Energy, told CNBC’s “Power Lunch” that Iran could still target loading facilities, pumping stations, terminals and storage units tied to pipeline systems.
For Iraq, the agreement points to a broader effort to diversify export infrastructure at a time when oil revenues remain closely tied to physical access to global markets. The restoration plan now depends on turning a diplomatic signing into a functioning cross-border energy corridor.
This story draws on original reporting from CNBC Markets.
