On Friday, Iraq and Syria agreed to revive a long-idled oil pipeline linking northern Iraq to Syria's Mediterranean coast. The idea is straightforward: give Baghdad a way to export oil without relying on the Strait of Hormuz, which has been a mess since the U.S.-Iran conflict disrupted tanker traffic.
The agreement was signed during a U.S.-Iraq investment summit in Washington, with U.S. Energy Secretary Chris Wright overseeing the signing by Basra Oil Company CEO Bassem Abdul Karim Nasr and Syrian Petroleum Company CEO Youssef Qablawi, according to CNBC.
The pipeline runs from Iraq's northern oil hub of Kirkuk to Syria's Mediterranean coast. It has a nameplate capacity of 700,000 barrels per day. It has been offline since it was damaged during the 2003 U.S. invasion of Iraq. That's 23 years of rust and neglect, but apparently it's worth reviving.
“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,” Wright said before the signing.
The agreement comes as Iraqi Prime Minister Ali al-Zaidi visits the U.S. this week, where he met President Donald Trump at the White House on Tuesday.
The move follows severe disruptions to Iraqi oil exports during the Iran conflict, when instability in the Strait of Hormuz hindered tanker traffic. Iraq, OPEC's second-largest oil producer, relies heavily on its southern export terminals near Basra, making it particularly vulnerable to disruptions in the strategic waterway.
According to OPEC data, Iraq's oil production dropped to about 1.9 million barrels per day in June, down from roughly 4.2 million barrels per day in February, before the conflict. That's a more than 50% decline. When your main export route becomes a war zone, you start looking for alternatives.
Other Gulf producers are also seeking alternatives to Hormuz. The UAE is constructing a second pipeline to Fujairah on the Gulf of Oman, while Saudi Arabia is reportedly evaluating an expansion of its Red Sea pipeline network.
Still, analysts caution that pipelines alone cannot eliminate geopolitical risks. A pipeline through Syria, a country that has seen its own share of conflict, might not be the most stable alternative. But for Iraq, it's better than having all its eggs in the Hormuz basket.
