Iraq and Syria signed an agreement on Friday to rehabilitate an oil pipeline that would provide an alternative to the Strait of Hormuz, a critical shipping chokepoint for global oil trade. The U.S. State Department welcomed the deal, which was signed during a U.S. Chamber of Commerce summit in Washington, D.C., with Energy Secretary Chris Wright presiding over the ceremony. The pipeline, which runs from Kirkuk in northern Iraq to Syria’s Mediterranean coast, has been offline since the U.S. invasion of Iraq in 2003. Upon rehabilitation, it is expected to have an initial transport capacity of 2 million barrels per day (bpd) of crude oil, according to the State Department. The U.S. Energy Information Administration previously reported the pipeline’s capacity at roughly 700,000 bpd.
Regional Implications and Alternatives
The agreement comes as countries across the Middle East seek alternatives to the Strait of Hormuz, through which about 20 million barrels of crude oil and other oil products pass daily, accounting for 20% of global oil trade. In March, Iran imposed a blockade of the strait following strikes by the U.S. and Israel, causing global energy market turmoil. Iraq, the second-largest oil producer in OPEC, has been heavily impacted by disruptions in Hormuz, with production falling more than 50% to about 1.9 million bpd in June compared to 4.2 million bpd in February. The pipeline’s restoration could help Iraq reduce its reliance on the southern port city of Basra on the Persian Gulf, its primary export route.
Broader Regional Efforts
Several Gulf states are also expanding pipeline capacity to reduce dependency on Hormuz. The United Arab Emirates is building a second pipeline to the Port of Fujairah on the Gulf of Oman, which would double its export capacity outside the strait. Saudi Arabia is considering expanding its pipeline to the Red Sea by 2 million bpd, according to reports. Analysts have noted that pipelines can act as a hedge against geopolitical risks, though they come with their own challenges.
U.S. Involvement and Rationale
The U.S. has backed the project through a U.S.-led international consortium to handle the technical and financial aspects. Energy Secretary Chris Wright emphasized the potential benefits for Iraq, stating, 'There is so much room to drive improvement in Iraq, to raise oil production, to reduce dependencies on hostile neighbors, to bring freedom, prosperity, and abundant energy to the nation of Iraq.' The deal was signed by Basra Oil Company CEO Bassem Abdul Karim Nasr and Syrian Petroleum Company CEO Youssef Qablawi.
Historical Context
The pipeline was originally built to transport Iraqi oil to global markets but has been non-operational since 2003. Its restoration could provide a significant alternative to Hormuz, particularly amid ongoing tensions in the region. The project aligns with broader efforts to diversify oil export routes and mitigate risks associated with maritime chokepoints.