Iraq transports its oil past Hormuz for first time in decades as war with Iran chokes exports

Iraq's state oil company has transported crude oil past the Strait of Hormuz for the first time in decades as the ongoing Iran war jeopardizes traditional export routes. The Iraqi Oil Tankers Company shipped two million barrels of crude to destinations outside the strait, marking a significant shift in how Iraqi oil is sold. This move was part of a new strategy aimed at securing better sales and pricing opportunities, rather than relying on the previous Basra port model.

The Oil Tankers Company is now exploring the possibility of purchasing and owning specialized crude tankers to enhance its control over this crucial source of revenue. The move comes as Iraq, the world's second-largest oil producer, faces a severe economic and security crisis since the Iran war began in February. Oil accounts for at least 90% of Iraq's state revenue, with most of its exports – roughly 3.3 million barrels per day – previously transported through the Strait of Hormuz.

However, Iran has effectively closed this narrow waterway due to missile, drone attacks, insurance price surges, and naval clashes. As Iraq finds itself in the middle of the conflict, with Iranian-aligned factions launching attacks from its territory, the Gulf states have blamed Baghdad for the tensions. Iraq has been seeking alternative routes, such as reopening the Iraq-Turkey pipeline and trucking crude to Syria, but these options currently handle only a fraction of the total volume.

The government is working to revive these alternatives, aiming to increase export capacity to five million barrels per day after completing strategic pipelines. This new VLCC operation demonstrates Iraq's determination to bypass the Strait of Hormuz, ensuring reliable oil deliveries and securing better pricing, as opposed to leaving buyers to bear the risks associated with the ongoing war.