Iraq Is Envisioning New Oil Pipelines — But They Are Likely a Pipe Dream

Iraq’s reliance on oil exports through the now-closed Strait of Hormuz may spell financial disaster for Baghdad, which has limited options to avert a crisis.

More than 94 percent of Iraq’s oil exports typically pass through the strait, and oil revenues account for roughly 90 percent of the country’s federal budget. As a result of the strategic waterway’s closure and attacks on Iraqi oil infrastructure by Iran-backed militias, the country’s oil production at its southern fields fell by about 80 percent in March — from an average of around 4.3 million barrels per day (bpd) before the war to 800,000 bpd that month. Production grew to 1.5 million bpd according to Iraq’s deputy oil minister, Bassem Mohammed, on May 2. In addition to export limitations forcing a drawdown in production, some Iraqi facilities opted to go offline preemptively due to threats or damage from drone and missile attacks.

After an Iranian attack on two tankers used to transport Iraqi oil on March 12, Iraq determined maritime exports were not safe and paused oil terminal operations on its southern coast along the Arabian Gulf. Iraq only resumed exports from the southern Basra terminal on April 17, despite Khatam al-Anbiya Central Headquarters, the operational command of Iran’s armed forces, previously stating on April 4 that Iraq was exempt from any restrictions on transiting the Strait of Hormuz. The Agios Fanourios I, a Malta-flagged tanker, arrived in Basra on April 17 to load crude from Iraq’s southern fields, after Iran had prohibited the vessel from transiting the strait earlier that month. However, according to Automatic Identification System (AIS) tracking data, the ship remains stuck in the Arabian Gulf, just before the Strait of Hormuz. In addition, the Comoros-flagged oil tanker HELGA arrived at Basra on April 24. The ship appears to have exited the Strait of Hormuz at the end of April or first days of May.

Regional instability continues to complicate Iraq’s ability to export oil, particularly because the country lacks its own fleet and relies on foreign-owned tankers, which are wary of security concerns and insurance costs. On April 18, Iraq’s Ministry of Oil said production would resume across all fields, but it is unclear whether export capacity will be sufficient to meet this output. Mohammed reiterated on May 2 that oil production and export could return to normal levels in a week post-conflict, but damage incurred from attacks and the consequences of shutting off production may complicate such a rapid return.

Iraq’s Non-Hormuz Export Options

On March 19, Iraq announced that it had begun exporting oil via a pipeline running from Kirkuk in northern Iraq to Turkey’s Mediterranean Ceyhan port, with an initial capacity of 250,000 bpd. However, in early May, exports via this route amounted to roughly 200,000 bpd. Iraq hopes to increase exports through this route to 650,000 bpd, with 250,000 bpd coming from northern fields in federal Iraq — the term for areas under Baghdad’s direct control — and 400,000 bpd coming from fields in Iraq’s semi-autonomous Kurdistan Region. This total would still be well below Iraq’s average daily export volume of 3.45 million barrels in 2025.

The pipeline, known as the Iraq-Turkey Crude Oil Pipeline (ITP), comprises multiple segments. The current operational route in Iraq goes through the country’s semi-autonomous Kurdistan Region and is operated under the political authority of the Kurdistan Regional Government (KRG). Under pressure from Baghdad and the United States, the KRG agreed to open the pipeline to exports from federal Iraqi territory before reaching a permanent agreement with Baghdad over policies which, in Erbil’s view, undermine the Kurdistan Region’s autonomy. In addition, a durable agreement likely hinges on the federal Iraqi government addressing Kurdish security concerns over ongoing attacks by Iran-backed Iraqi militias against the KRG.

Iraq is also adapting to the Hormuz crisis by exporting crude oil via tanker trucks that travel through Syria. On April 1, 299 trucks entered Syrian territory via the al-Tanf/al-Waleed border crossing from Iraq’s western Anbar province and traveled to the Port of Baniyas on Syria’s Mediterranean coast. The initial overland exports are around 10,000-15,000 bpd. Emad Masha’al, the district manager of Anbar’s al-Rutba district, told Rudaw Media Network that roughly 500-700 tankers per day were crossing through al-Tanf/al-Waleed in mid-April. However, Syria’s Baniyas port can only process 300 tankers — just under 60,000 bpd. The opening of the Yarubiyah/Rabia crossing between Iraq and Syria in northern Iraq’s Nineveh province on April 20 added an additional export route.

Iraq’s State Oil Marketing Organization (SOMO) agreed to export 650,000 metric tons of oil per month from April to June via Syria. This total equates to roughly 4.2 million barrels per month, roughly what Iraq produced in just a single day pre-conflict. A first tanker, the Greek-flagged Asahi Princess, began loading Iraqi oil at Baniyas on April 15 and is expected to carry about 85,000 metric tons, roughly 500,000 barrels. However, AIS data shows the ship is still in port. Exporting oil via Syria faces administrative and logistical delays at both ports and border crossings, as well as the need to address security concerns during transit. For example, Islamic State terrorists attacked a non-Iraqi tanker truck transiting Syria in mid-April.

Alternative Export Routes Under Exploration

Iraq is reportedly nearing the repair and reactivation of an additional segment of the ITP that bypasses the Kurdish-managed route. Iraq’s revitalized alternative pipeline runs from Baiji in Iraq’s northern Salahaddin province to the town of Fishkhabour in the KRG, where it meets up with the Turkish segment of the ITP. Islamic State terrorists damaged the Baiji-Fishkhabour pipeline in 2014, and it has been inoperable since. When the pipeline is reactivated, it is intended to start by exporting 600,000 bpd and is designed to have a capacity of 1.6 million bpd.

However, Ankara will exit the existing treaty with Baghdad that governs the ITP in July 2026 upon the expiration of the Crude Oil Pipeline Agreement, which has allowed Iraqi oil exports via Turkey since 1973. Among other concerns, Turkey has cited Iraq’s consistent failure to deliver at least 1.5 million bpd under the agreement. Baghdad is unlikely to meet this number in the coming months, as its realistic export capacity via the ITP is much lower. Without a new lasting deal between Turkey and Iraq, the sole Iraqi pipeline providing an alternative to Hormuz would be closed.

Regardless of the need to renew the treaty, another Iraqi proposal is to establish a pipeline to move oil from Iraq’s southern fields through Haditha to Baiji in the north, and then on to the Fishkhabour connection to Turkey. In April, Iraqi Prime Minister Mohammad Shia al-Sudani approved the allocation of $1.5 billion to develop this infrastructure in 2026, an effort to be carried out in partnership with Chinese companies. The project’s goal is also to expand export options from the Haditha juncture, possibly to Baniyas in Syria or Aqaba in Jordan. The only existing pipeline along these routes, which runs between Kirkuk and Baniyas, ceased operations in 2003 after being severely damaged during the U.S. invasion of Iraq. This infrastructure would take years to rehabilitate, and Iraqi officials have said that repairs are stalled or abandoned due to security concerns in Syria.

Finally, Iraqi Ministry of Oil Spokesperson Sahib Bazoun said on April 14 that the ministry was also exploring “agreements to reactivate the Saudi pipeline, which has been inactive since 1991.” Bazoun was referring to the Iraqi Pipeline in Saudi Arabia (IPSA) that runs from southern Iraq to Saudi Arabia’s Red Sea coast in Yanbu. However, the revival of IPSA, which was closed following the Iraqi invasion of Kuwait and has a designed capacity of roughly 1.6 million bpd, remains unlikely, as Iraq and Saudi Arabia would have to overcome disagreements over the pipeline’s control and settle other political differences. It recently came to light that Iraqi militias were behind drone and missile attacks on Yanbu, amongst other Saudi targets, during the recent Iran conflict. Furthermore, the fact that the Iraq-to-Saudi Arabia section of the pipeline has been unused for 30 years presents significant logistical hurdles to its reactivation.

Iraq’s Economic Challenges

As Iraqi leaders seek to forestall an impending budget crisis by diversifying the country’s oil export options, they face many constraints, some of their own making. First, a lack of infrastructure means that alternative export methods are years away and require substantial investments. The potential dangers of overreliance on the Strait of Hormuz were not news to Iraq in March 2026, but Iran’s closure of the waterway still caught Baghdad unprepared.

Second, in seeking overland exports, the Iraqi federal government must negotiate with its neighbors, including the KRG and, potentially, Saudi Arabia. This need for diplomacy comes after Iran-backed Iraqi militias just spent over a month launching hundreds of attacks in the region, many of which targeted crucial negotiation partners. These militias have continued attacking Kuwait and the KRG despite a ceasefire.

Iraq’s reliance on the Strait of Hormuz is proving costly. Baghdad now must turn to its neighbors to bail the country out — no easy task after Iraq’s militias hit them with hundreds of drones and missiles.

Bridget Toomey is a research analyst at the Foundation for Defense of Democracies (FDD). For more analysis from Bridget and FDD, please subscribe HERE. Follow FDD on X @FDD. Follow Bridget on X @BridgetKToomey. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.