Iraq seeks alternative oil export routes as Strait of Hormuz disruptions threaten crude exports, revenues, salaries and economic stability.
Iraq Seeks Oil Export Alternatives as Strait of Hormuz Crisis Deepens
Iraq is urgently searching for alternative oil export routes as the ongoing conflict between the United States and Iran and the closure of the Strait of Hormuz continue to disrupt the country’s vital oil trade.
Iraq depends heavily on oil revenues, which account for around 90 percent of the federal budget. The disruption to exports has therefore created a major financial challenge for the government, affecting its ability to fund public spending and pay salaries.
Speaking at the United Nations General Assembly, Iraqi Prime Minister Ali al-Zaidi highlighted the growing concerns surrounding shipping and maritime security in the Strait of Hormuz. He warned that the disruption had contributed to rising global oil prices and created serious economic difficulties for Iraq.
The closure of the strategic waterway has prevented Iraq from exporting around 90 percent of its oil through the Gulf. The country has reportedly lost about $60 billion in oil revenues since the conflict began, putting additional pressure on government finances.
Iraq Searches for Alternative Oil Export Routes
To reduce its dependence on the Strait of Hormuz, Iraq is examining several alternatives. These include increasing exports through the Iraq-Turkiye Pipeline (ITP) and developing potential routes through Jordan and Syria.
However, most of these options require significant investment, infrastructure and political agreements. They also cannot immediately replace the huge volumes of crude normally shipped through Iraq’s southern Gulf terminals.
Iraqi political and security analyst Sarmad Al-Bayati said alternative routes through Turkiye, Syria or Jordan would not provide an immediate solution if the Strait of Hormuz remains closed.
The Iraq-Turkiye Pipeline is currently the most developed alternative. Iraq continues to transport crude northward toward the Turkish Mediterranean port of Ceyhan. Authorities are also moving additional oil from southern fields to storage facilities in northern Iraq.
Basra Oil Company manager Bassem Abdul Karim said around 250,000 barrels per day were recently being transported by road from southern Iraq to Kirkuk. Plans are in place to increase that volume to as much as 750,000 barrels per day.
Iraq and Turkiye have also signed a one-year, extendable agreement allowing at least 750,000 barrels per day to be exported through the Iraq-Turkiye Pipeline to Ceyhan.
Strait of Hormuz Still Critical to Iraqi Oil Exports
Despite efforts to expand alternative routes, Iraq remains heavily dependent on the Strait of Hormuz.
Iraq has used complicated ship-to-ship transfers to move some crude from Basra and other Gulf ports. Smaller vessels have transported oil through the strait under US military protection, but the process is expensive and difficult.
Ali Nazar, head of the Iraqi Oil Marketing Organisation, said Iraq’s oil export capacity was approximately 4.2 million barrels per day in September. However, actual average exports were only around 2.5 million barrels per day, compared with approximately 3.5 million barrels per day before the crisis.
Iraq has also been forced to offer significant discounts to attract buyers. According to Nazar, discounts reached about $26.50 per barrel for medium crude and approximately $28 for heavy crude.
Competition is particularly strong because other Gulf producers, including Kuwait and Qatar, have also offered substantial discounts.
In August, Iraq exported around 70 million barrels of crude oil, generating approximately $4.5 billion in revenue. Most of that oil came from southern fields and was transported through the Strait of Hormuz.
Economic Pressure Could Increase
The continuing disruption has placed Iraq under severe financial pressure. The government is considering austerity measures to address the growing budget deficit, although such measures could prove unpopular and have already contributed to public protests.
Former OPEC spokesman Hassan Hafidh said Iraq had not done enough before the crisis to establish reliable alternative oil export routes.
He argued that the country’s existing alternatives cannot currently handle the volumes required to replace exports through the Strait of Hormuz.
Iraqi Oil Minister Basim Mohammed Khudair has also warned that the situation around the strait remains highly unstable.
Even if Iraq manages to export around three million barrels of crude per day temporarily, there is no guarantee that this level can be maintained.
“If the war drags on, exports will drop,” Khudhair said, emphasizing that Iraq’s import and export operations remain heavily dependent on security in the Strait of Hormuz.
For Iraq, developing alternative oil export routes has become an urgent economic priority. However, expanding pipelines through Turkiye, Jordan or Syria will take time. Until those options can handle significantly larger volumes, the security and accessibility of the Strait of Hormuz will remain central to Iraq’s oil exports, government revenues and broader economic stability.
