American Institute: Iraqi-Gulf Partnership Offers a Way to Diversify Oil Exports
American Institute: Iraqi-Gulf Partnership Offers a Way to Diversify Oil Exports
2026-08-15
Shafaq News – Special Translation
Iraq needs to diversify its oil export options, including through the Emirati option, which also appears risky. The United States must encourage Baghdad’s rapprochement with the Gulf states in this context and in the context of improving relations, at a time when Iraqis are struggling to deal with the financial crisis, according to the Foundation for Defense of Democracies.
The American Institute said in a report translated by Shafaq News Agency that Iraq’s oil exports are hovering around half of the 3.4 million barrels per day that existed before the regional war and the closure of the Strait of Hormuz, noting that Iraq depends on oil revenues to cover 90% of its budget, and is now struggling to meet its expenses.
According to the report, the UAE has provided a partial solution for Iraq, noting that SOMO, the state oil marketing company, recently announced that Iraqi oil is being sold to Abu Dhabi National Oil Company (ADNOC), amid a slight increase in Iraqi exports through Hormuz.
The report noted that ADNOC transports oil through the Gulf and through the Strait of Hormuz through what is called dark transit, i.e., operating the voyages with the ship’s tracking system switched off. Once out of the strait, the oil is transferred to ships which in turn transport it to buyers, most of whom are in Asia.
However, the report stated that these shuttle operations are not a guaranteed way to avoid the Iranian threat to shipping, recalling that the UAE condemned on Thursday (August 13) Iranian attacks on two ADNOC ships while they were crossing the Strait of Hormuz, without clarifying whether those ships were involved in transporting oil.
However, the report said that the shuttle transport operation carried out by ADNOC provides Iraq with an important route for exporting oil, at a time when Baghdad desperately needs to diversify its export options.
While the report noted that prior to the closure of Hormuz, approximately 94% of Iraq’s oil exports were transported through the Gulf waters, and that about 90% of the country’s oil production came from the southern fields, it explained that Iraq lacked the pipeline infrastructure to direct oil north for export.
Therefore, the report considered that Iraq has two main alternatives for the export route instead of the Gulf. The first is the Iraq-Turkey pipeline (ITP) from northern Iraq to the Turkish port of Ceyhan, while the second alternative is transporting fuel oil by truck overland to the Syrian port of Banias and the Jordanian port of Aqaba.
The report continued that during the closure of Hormuz, exports via the pipeline to Ceyhan did not exceed 200,000 barrels per day, as trucks cannot match the capacity of sea-based transport vessels.
The report stated that although Tehran and Baghdad held talks to facilitate Iraq’s ability to export its oil through the Gulf, with Tehran announcing last April that Iraq was not subject to restrictions on exports through Hormuz, this did not lead to a significant increase in Iraqi oil exports by sea.
This is partly because Iraq lacks a national tanker fleet and relies on foreign-owned vessels, which are reluctant to make the journey despite Iranian guarantees.
The report noted that the Iraqi government recently acknowledged that without the flow of revenue from oil sales, Iraq is facing a financial crisis, making it difficult to pay the salaries of government employees.
He noted that Iraq’s revenues in May and June amounted to about $2 billion, which is much less than the about $6 billion the country spends monthly on the public sector workforce, retirees and social security.
The report went on to say that while there is no alternative to free passage through the Gulf, Iraq needs maximum export options to mitigate the country’s financial crisis.
Therefore, the report called on Washington to encourage Iraq to partner with the Gulf states, not only for oil exports, but also as a step to repair relations and partnership between the two sides, especially after Iraqi militias launched attacks against Gulf states during the war between Iran and the United States.
The report concluded that the Gulf states could provide investment, electricity, and support to Iraq in developing its energy sector and other areas, a partnership that would enhance Iraq’s ability to break free from Tehran’s sphere of influence.
shafaq.com
