Iraq Allows Fuel Export by Land via Syria for the First Time in Decades

SadaNews - Iraq has resorted to exporting fuel by land via Syria for the first time in decades, a step that reflects the level of disruption affecting traditional shipping routes amidst the worsening war with Iran.

Iraq's oil marketing company, "SOMO", has signed contracts to supply approximately 650,000 tons of fuel oil monthly from April to June, according to a document reviewed by "Reuters", with shipments to be transported overland through Syrian territory, a route that has not been used for many years.

The first convoy of shipments set off on Tuesday, amid ongoing restrictions on navigation through the Strait of Hormuz. Two informed sources said that the end of the civil war in Syria, and the unprecedented disruptions caused by the war with Iran, have made this route the optimal choice currently, despite the higher operational costs compared to maritime shipping.

Previously, Iraq primarily relied on maritime exports through Gulf ports like Khor al-Zubair to reach international markets, before recent developments forced it to seek alternative solutions.

The Pressure of War on Export Routes

This move comes in light of the repercussions of the war on Iran, which has led to a practical disruption of shipping traffic through the Strait of Hormuz, which accounts for about one-fifth of global oil trade.

This reality has forced oil-producing countries, including Iraq, to cut production due to storage facilities filling up amid the difficulty of exporting, with output from key fields in the south declining by about 80% to around 800,000 barrels per day.

Under normal circumstances, Iraq's production is about 4 million barrels per day, most of which comes from southern fields that were pumping over 3 million barrels daily before the war.

This represents part of a broader wave of production cuts in the Gulf, as Saudi Arabia, the UAE, Kuwait, and Qatar have also reduced their supplies amid the loss of export capacity and filled storage tanks, while estimates from the International Energy Agency indicate that disrupted supplies could reach about 10 million barrels per day.

Documents from "SOMO" indicate that the shipments will be sold at discounts ranging from $155 to $170 per ton. The contracts are distributed among four local traders, including contracts to supply 720,000 tons of high-sulfur fuel oil over three months, divided between Iraqi refineries in the north, center, and south, along with smaller contracts, according to "Reuters".

A Broader Shift in Iraq's Strategy

This step is part of broader efforts by Iraq to diversify its export outlets and reduce dependency on the Gulf, as it is considering establishing a new pipeline linking its territory to the Syrian port of Baniyas, away from the old Kirkuk-Baniyas line, which is no longer operational, alongside plans to increase export capacity via the Turkish port of Ceyhan.

This route revives old logistical ties between Iraq and Syria, dating back to the Kirkuk-Baniyas pipeline that began operations in the 1950s, transporting oil from the Kirkuk fields in northern Iraq to the port of Baniyas on the Mediterranean Sea at a design capacity of nearly 300,000 barrels per day, before it was halted since the early 2000s due to wars and sanctions, and later damaged during the Syrian conflict.

Baghdad is also exploring the development of alternative routes involving Jordan, Syria, and Turkey, aiming to enhance the resilience of the export network against geopolitical disruptions, especially given the recurring risks associated with the Strait of Hormuz.