In the wake of escalating tensions in the Middle East, including the US-Israel war on Iran leading to the effective closure of the Strait of Hormuz, Iraq is actively exploring new routes to export its crude oil, as per Al Jazeera report.
The Strait of Hormuz, a critical chokepoint handling around 20% of global seaborne oil trade, has seen shipments plummet, severely impacting Iraq’s southern export terminals. This has forced production cuts and urgent diversification efforts to safeguard the country’s economy, which relies heavily on oil revenues.
Why the Strait of Hormuz Matters for Iraq’s Oil Exports
The Strait of Hormuz connects the Persian Gulf to the open ocean, serving as the primary export pathway for oil from major producers like Iraq, Saudi Arabia, Kuwait, UAE, Qatar, and Iran. Disruptions here—stemming from attacks on tankers, military threats, and halted maritime traffic—have left Iraq with limited storage capacity (reportedly just days’ worth) and forced a sharp drop in output from over 4 million barrels per day (bpd) to around 1.3-1.4 million bpd in recent reports.
Iraq’s southern ports, such as those in Basra, have suspended operations due to security risks, including incidents involving explosive-laden boats targeting tankers. This blockade has triggered a scramble for bypass routes to maintain cash flow and prevent further economic strain.