Iraq seeks to bypass Hormuz, resumes Kirkuk oil exports to Turkey

On Wednesday, to circumvent the challenges arising from the US-Israel war on Iran, Iraq began sending oil from the Kirkuk fields to Turkey's Ceyhan port via the Kurdistan Region pipeline, following an agreement between Baghdad and Erbil.

This development is significant for Iraq's energy sector as the country seeks to offset losses from Hormuz export disruptions amid regional conflict.

Oil Minister Hayan Abdul Ghani said exports began at 10:00 am local time on Wednesday and are expected to reach a target of 250,000 barrels per day within two days. This figure represents about 7–8% of Iraq's total average pre-disruption oil exports.

Kirkuk’s oilfields, including Bai Hassan, Jambur, and Khabbaz, are among Iraq's oldest and most productive. Ongoing technical and security challenges have led Baghdad to seek international assistance to restore output.

Iraq's oil production has declined sharply due to regional escalation, falling from approximately 4.3 million barrels per day—its typical recent output—to the current range of 1.3–1.6 million barrels per day.

Before the recent disruptions, Iraq exported around 3.4 million barrels per day, with the majority shipped via southern terminals, which accounted for nearly 80% of total exports.

Breakthrough 

US Special Envoy to Syria Tom Barrack stated he helped facilitate the agreement, describing his efforts as helping to "bring temperatures down".

"I was very proud of both Erbil and Baghdad for doing the right thing for the country," he told Rudaw.

Iraqi Kurdistan Region Prime Minister Masrour Barzani said exports were allowed due to "exceptional circumstances" in Iraq, and that discussions with Baghdad would continue to address trade restrictions and guarantees for energy companies.

Exports through the Kurdistan pipeline had been halted since March 2023 following an arbitration ruling in Paris.

Limited relief

Analysts caution that the renewed exports are little more than a temporary salve for deeper wounds.

Economic expert Kamran Qadir told The New Arab: "Resuming the export of Kirkuk oil through the Kurdistan Region, despite its technical and political importance, does not constitute a real solution to a potential financial crisis if oil exports through the Strait of Hormuz are halted due to military escalation in the region."

"The volumes expected to be exported through the pipeline to Ceyhan do not exceed 10% to 15% of Iraq's total current exports—meaning, at best, about 340,000 to 510,000 barrels per day. This is a limited share that cannot compensate for any large-scale disruption in southern exports that depend almost entirely on passage through the Strait of Hormuz," Qadir noted.

"Iraq's economy depends primarily on oil revenues—which account for more than 90% of the state's budget—and any disruption to maritime export routes is a direct threat to financial and economic stability due to this high degree of dependence," he said.

"If the war reaches Iraq at its maximum level, the country may be able to withstand the shock for only six months, after which it will no longer be able to cope," he warned.

"Restarting Kirkuk exports represents a positive step towards diversifying export outlets and reducing geopolitical risks, but its impact remains limited unless it is accompanied by long-term strategies, including creating alternative export outlets and strengthening pipeline infrastructure outside the Gulf," Qadir added. "Within the next six months, Iraq can export oil by rehabilitating the Kirkuk–Baniyas pipeline, which passes through Syrian territory."

The Basra–Aqaba pipeline cannot be launched quickly either, as it requires a lengthy implementation period. The strategic pipeline that once carried Basra oil to Turkey has not been used for 30 years and requires time, cost, and rehabilitation.

"Even if Iraq rebuilds its pipeline from Kirkuk to the Turkish border, it will ultimately connect to the pipeline passing through the Kurdistan Region's Fishkhabur area, and the capacity of the Kirkuk–Ceyhan pipeline itself remains limited because it is relatively narrow," remarked Qadir.

Abdul Ghani said Iraq has issued tenders to export crude through Syria’s Baniyas port and Jordan’s Aqaba port, with contracts expected to be awarded within days.

He stated that tanker trucks will be used because there are no operational pipelines to those destinations.

The ministry has also reduced production to prioritise domestic needs, including refining and electricity generation, especially from fields rich in associated gas.

Before the agreement, Baghdad accused Erbil of blocking exports and linking pipelines to unrelated issues. The government said continued obstruction of the Kirkuk-Ceyhan pipeline could lead to legal action.

Erbil rejected these claims and accused Baghdad of misrepresenting facts and imposing an "economic siege."

The region blamed attacks on infrastructure for halted production and said it is ready for talks.