Iraq Seeks Alternative Oil Shipping Routes Amidst Iran Tensions

By MarEx 2012-12-18 13:42:00

Iraq may be looking into reviving inactive pipelines in order to get its oil to global markets, as tensions over Iran can result in the closure of the Strait of Hormuz.

Iraq’s plans include shipping more oil to the Port of Ceyhan in Turkey, as well as reopening the pipelines that will make it possible for Iraqi crude to be delivered to different ports in Syria, Lebanon and Saudi Arabia. According to CNN, oil is the source of more than 90% of Iraq's budget. About 80% of the 2.2 million barrels of oil Iraq exports daily flows through the strait, along with about 20% of world oil production.

Since Iran is fighting international calls to stop its uranium enrichment projects and prove that its nuclear program remains peaceful, the Islamic republic has threatened to close the Strait of Hormuz. This will ultimately shut down access to the Gulf.

Government officials in Iraq have approved some suggestions for alternative oil shipping options out of the southern port of Basra through the Persian Gulf. If the vital sea route was indeed cut off, Iraq could increase production through its pipeline from Kirkuk to Ceyhan. They could also ship more oil aboard tanker trucks in the short-term scheme. For long-term options, the main option is to again open a pipeline into Syria and Lebanon that was closed by the revolution that followed the 2003 U.S. invasion. Another pipeline that can be resurrected is the one to Saudi Arabia’s Red Sea port of Yanbu that has been inactive since the 1990 Iraqi invasion of Kuwait.

However, Iraqi infrastructure declined during the sanctions that followed the invasion of Kuwait, and putting those pipelines back into service could take years. The Yanbu pipeline was built during the Iran-Iraq war in the 1980s, when both countries targeted tankers coming in and out of each other's ports. The governmental committee also recommended building a new pipeline that would link Iraqi oil fields to Jordan's port of Aqaba, also on the Red Sea.