Iraq and Syria Agree to Rebuild Oil Pipeline, Offering Alternative to Strait of Hormuz

Iraq and Syria signed a pact on Friday to reconstruct an oil pipeline, creating an alternative to the Strait of Hormuz.

The agreement was signed in Washington, D.C., at a chamber of commerce summit concerning U.S. investment in Iraq. The signing ceremony was overseen by U.S. Energy Secretary Chris Wright and executed by the chief executives of Basra Oil Company and Syrian Petroleum Company.

Prior to the signing, Wright stated that there is significant potential for Iraq to enhance its oil output, diminish reliance on neighboring states with which it has hostile relations, and create opportunities for freedom, prosperity, and ample energy supplies for the nation.

Iraqi Prime Minister Ali Zaidy, who is currently on a visit to the United States this week, met with U.S. President Donald Trump at the White House on Tuesday.

According to data from the U.S. Energy Information Administration, the pipeline extends from Kirkuk in northern Iraq to Syria's Mediterranean coast, with a nameplate design capacity of 700,000 barrels per day. It has been shut down since sustaining damage in 2003.

Iraq, the second-largest oil producer within OPEC, suffered substantial losses during the U.S.-Iran conflict when tanker traffic through the Strait of Hormuz was disrupted. With limited pipeline export options, Baghdad relies on its southern port city of Basra, located on the Persian Gulf, to ship oil to global markets.

OPEC data indicates that Iraq's oil production in June fell by over 50% to approximately 1.9 million barrels per day, compared to around 4.2 million barrels per day in February, prior to attacks by the U.S. and Israel on Iran.

Several Gulf nations are aiming to increase pipeline capacity to reduce dependence on the Strait of Hormuz. The United Arab Emirates is constructing a second pipeline to the port of Fujairah on the Gulf of Oman, which would double its export capacity outside the strait.

Previous reports citing informed sources indicated that Saudi Arabia is considering expanding its pipeline to the Red Sea by 2 million barrels per day.

Analysts caution that pipelines can hedge against geopolitical risks associated with the Strait of Hormuz but do not eliminate the fundamental threat posed by Iran to energy infrastructure in the region.

Bob McNally, founder of Rapidan Energy, noted on Monday that the issue is not the waterway itself, but rather Iran's potential to use weapons to target loading facilities, pump stations, terminals, jetties, and storage tanks for the pipelines.