Iraq considers alternative oil export routes due to Strait of Hormuz concerns

Iraqi Prime Minister Ali al-Zaidi addressed the United Nations General Assembly on Friday, discussing the challenges his country faces due to the ongoing conflict between the US and Iran. The closure of the Strait of Hormuz has significantly impacted Iraq’s sea-based trade, including oil exports.

As a result, Iraq has lost approximately 90% of its ability to export oil via the Gulf, with estimated losses totaling $60 billion since the war began. Oil revenues account for about 90% of Iraq’s federal budget, and the decline in exports has affected the government’s ability to pay salaries, leading to protests in Baghdad.

To address the deficit, the Iraqi government is considering austerity measures, but these are unpopular among the population. Al-Zaidi suggested increasing oil production and diversifying export routes as potential solutions. This could involve developing existing channels, such as the Iraq-Turkey Pipeline, or establishing new ones with Jordan and Syria.

However, analysts note that none of these proposals provide a quick solution to Iraq’s economic woes. Iraqi political analyst Sarmad Al-Bayati stated that the lack of alternatives is a significant challenge for the country. “At present, the only option is to export through the Strait of Hormuz, which depends primarily on the situation in the strait.”

Iraq has been relying on ship-to-ship transfers and US military protection to transport oil through Basra and other Gulf ports. The Iraqi Oil Marketing Organisation reported that Iraq’s oil export capacity was 4.2 million barrels in September, but actual exports were lower at 2.5 million barrels.

The company is offering discounts for medium and heavy oil, but finding buyers remains challenging due to continued attacks on vessels transiting the strait. Despite this, the Iraqi government continues to explore alternative routes, including the Iraq-Turkey Pipeline, which allows for crude oil export through Turkey.

Source: Al Jazeera