The Strait of Hormuz is currently effectively blockaded, prompting Iraq and the United Arab Emirates to urgently advance alternative oil pipeline projects to reduce their dependence on this critical waterway.
Iraq's economy relies heavily on crude oil exports from the Persian Gulf, with the petroleum sector accounting for over half of its GDP in 2025.
An oil pipeline through the Kurdistan region to Turkey is set to become a key alternative route for Iraqi crude, potentially alleviating the export crisis.
On April 29, 2026, an employee of the Basra Oil Company was working at the Nahr Bin Umar oil and gas field on the outskirts of Basra in southern Iraq. Earlier this month, the Baghdad government stated it had reached relevant agreements with both the US and Iran to mitigate the impact of the Strait of Hormuz blockade on Iraq's oil exports.
Latest data shows Iraq and the UAE are highly dependent on Persian Gulf shipping routes. Both nations are now accelerating the expansion of oil pipelines to compensate for the loss of crude export capacity caused by the blockade of the Strait of Hormuz.
Last week, the Iraqi cabinet approved a plan to expedite the operation of crude oil exports via the Kurdistan-Turkey pipeline network. The daily capacity of this pipeline is set to increase from the current 220,000 barrels to 770,000 barrels, more than tripling its throughput.
This pipeline runs through the Kurdistan region directly to the port of Ceyhan on Turkey's Mediterranean coast. According to World Bank data, the oil industry contributed 53% of Iraq's real GDP in 2025. The nation's economy is entirely dependent on crude oil exports, and operating the pipeline at full capacity will effectively ease economic pressure.
Data exclusively provided to CNBC by the economic intelligence firm QuantCube Technology indicates that, constrained by geography and complete reliance on the Strait of Hormuz for crude transport, Iraq's overall exports have nearly ground to a halt since the conflict began.
QuantCube calculates countries' total freight export volumes by tracking the deadweight tonnage of vessels departing from ports in Iraq and the UAE.
In an interview with CNBC, QuantCube's Senior Economist, Alan Le Maignan, stated, "Iraq is in a far more difficult situation, as almost all of its crude oil needs to be exported through the Strait of Hormuz."
At a press conference on May 16, Iraq disclosed that only 10 million barrels of crude oil were exported via the Strait of Hormuz in April. Before the conflict, the country's monthly crude exports could reach 93 million barrels.
Simultaneously, Abu Dhabi is accelerating the construction of a new east-west oil pipeline to the port of Fujairah. This project aims to expand crude export capacity and bypass the Strait of Hormuz, a critical maritime chokepoint.
The project is expected to be operational by 2027. Once completed, it will double the crude export capacity of the Abu Dhabi National Oil Company. On May 15, Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan ordered the acceleration of the pipeline's construction to meet the world's growing energy demands.
The UAE has other crude oil export terminals available, so the impact of the Strait of Hormuz blockade on it is relatively limited.
Le Maignan added, "Iraq's predicament is far worse than that of the UAE and Saudi Arabia, constrained by its geography and lack of alternative export routes. The UAE has the Fujairah port terminal; even if port facilities are damaged in the conflict, it theoretically still possesses the supporting infrastructure and transport vessels for large-scale crude exports."
However, existing alternative transport routes also face security threats: Saudi Arabia's east-west pipeline was attacked by Iran in April, and Fujairah port has also been targeted by Iranian drone attacks, forcing multiple suspensions of crude loading operations at the terminals.
The International Energy Agency notes that Saudi Arabia's east-west pipeline, which connects Persian Gulf refining facilities to Red Sea export hubs, combined with the UAE's pipeline to Fujairah port, have a combined available daily capacity of approximately 3.5 to 5.5 million barrels. However, Saudi Arabia stated in March that its pipeline's current daily throughput could reach 7 million barrels.
Even if both pipelines operate at full capacity, their volume would still fall far short of the pre-war daily passage of about 20 million barrels of crude and petroleum products through the Strait of Hormuz.
Establishing alternative crude oil export channels not only requires massive infrastructure investment but also consumes significant time. If pipelines traverse the territories of multiple countries, numerous cross-national cooperation agreements are also needed.
Data from Lloyd's List Intelligence shows that the current number of vessels transiting the Strait of Hormuz is far below pre-war levels, with May's traffic hitting the lowest point since the outbreak of the Iran-Israel conflict.
Vessels stranded in the Persian Gulf face a dilemma: if they attempt to cross the Strait of Hormuz without Iran's permission and without using designated channels, they are highly vulnerable to attack by Iranian forces. However, complying with Iran's transit requirements would expose them to the risk of US sanctions.
Comments