Iraq expects to begin transporting crude oil to a Mediterranean port through Syria from mid-October, as Baghdad moves to bypass the volatile Strait of Hormuz amid the ongoing war in Iran, The National reported on Friday.
The crude will be moved by tanker trucks along a route provided by Syria, after Iraq requested assistance from the Syrian authorities, the report said, citing Bloomberg and Yousef Qiblawy, chief executive of the state-owned Syrian Petroleum. The agreement between Baghdad and Damascus is “almost done”, and the first trucks carrying crude are expected to reach Syria by mid-October, Qiblawy said.
Deepening energy cooperation
The impending move follows a similar round of energy coordination between the two countries in late September, in which Iraq began importing petrol through Syria. An Iraqi Oil Ministry official told The National that the first cargo of imported petrol, comprising 32,000 tonnes, was being unloaded at the Baniyas refinery before being transported to Iraq by lorry.
Earlier, in April, Syria had become the main route for Iraqi fuel oil exports, partially compensating for the disruption to shipments caused by the war in Iran. At least 2.1 million tonnes of Iraqi fuel oil have since flowed by lorry to Baniyas, according to the report.
Hormuz disruption and Iraq’s export dilemma
Since the Iran war broke out in February, Iraq has faced one of its most serious economic and security challenges. The OPEC producer depends on oil for at least 90 per cent of its revenue, and most of its exports — about 3.3 million barrels a day before the war — crossed the Strait of Hormuz after leaving its southern Basra terminals.
The strait, through which roughly a fifth of the world’s energy exports passed before the war, remains a flashpoint in the eight-month conflict. Ship-tracking firm Kpler estimates that the seven-day moving average of crude exports from the Gulf was 18.3 million barrels per day on September 30, compared with an average of 18 million barrels per day that passed through the region in the 12 months before the war, a figure that covers Hormuz, the Red Sea and other methods, The National reported.
The agreements between Iraq and Syria also mark a significant deepening of ties, the report noted, as Baghdad deals with disruption to its trade through Hormuz and as Washington pushes for closer relations between the two countries.
Seeking new outlets
Although Iraq is a major crude oil producer, it faces petrol shortages because of problems with its refineries and the management of its energy infrastructure. In a related development, the state-owned Iraqi Oil Tankers Company last Sunday transported two million barrels of its own crude beyond the Strait of Hormuz for the first time in decades.
The move was intended to shift part of Iraq’s oil exports from the existing free-on-board Basra port model to transit the strait and take advantage of better sale and pricing opportunities, director general Ali Qais said, adding that the company is also in talks to buy specialised crude tankers as soon as possible in order to compete with regional peers.
