U.S. companies signed roughly $60 billion in agreements with Iraq Friday — including deals designed to break Iran’s stranglehold on global oil shipments.
The agreements, signed at the U.S. Chamber of Commerce, focus on creating alternative routes for shipping oil out of the Persian Gulf without passing through the Strait of Hormuz.
Iran has repeatedly tried to close the Strait since the U.S.-Iran war began Feb. 28. About a fifth of the world’s oil flows through the waterway — and Tehran knows it.
“This will make the Strait of Hormuz an afterthought.”
That’s Thomas Barrack, U.S. Ambassador to Turkey, describing what the pipeline agreements will accomplish once operational.
The deals also covered healthcare, communications, and infrastructure — but the oil pipeline projects are the strategic centerpiece.
Chevron signed three separate agreements with Baghdad. Jake Spiering, Chevron’s president of corporate business development, said two focus on boosting oil production, while a third involves “investing in a pipeline that’s going to create another export route out of Iraq to world markets.”
Spiering called it “very important for energy security.”
The new pipeline will connect southern Iraq’s Basra to western Iraq’s Haditha, then run to the Ceyhan port in Turkey and the port of Baniyas on Syria’s coast. Iraqi officials project the pipeline will carry about 2 million barrels per day.
Goldman Sachs estimates seven different pipelines under development in the region could carry roughly 60% of the oil currently shipped through Hormuz by the end of 2028.
That’s about 14 million barrels per day — out of the roughly 23 million barrels per day that flowed through Hormuz before the war.
The timeline isn’t instant. Goldman Sachs notes that pipelines in just one country take at least two and a half years to build — and these pipelines cross multiple nations.
But the signing follows Iraqi Prime Minister Ali Falah al-Zaidi’s Thursday meeting with Chevron executives in Houston, where he urged the company to expand and accelerate its investments in Iraq.
In a speech Friday, al-Zaidi said Iraq’s economy is seeking long-term investment and partnerships — not merely contractors to carry out projects.
Al-Zaidi stressed his government’s commitment to communication and cooperation with the U.S. Chamber of Commerce, calling it “the place where economic decisions are made.”
The State Department welcomed a separate agreement between Iraq and Syria “to advance the rehabilitation and reconstruction of the Iraq-Syria crude oil pipeline as a priority infrastructure project.”
The department added: “The United States welcomes the engagement of a U.S.-led international consortium to execute the technical and financial aspects of this project.”
Oil prices Friday reflected the ongoing volatility. West Texas crude rose nearly 5% to $88 a barrel — up from about $67 before the war began. It had topped $110 in early April before falling after a truce, then climbed again on renewed U.S.-Iran conflict.
Iraq — home to both Iran-backed militias and U.S. bases — found itself in the crosshairs after the U.S. and Israel launched their war on Iran Feb. 28.
Syria, meanwhile, has stayed on the sidelines and promoted itself as a bastion of stability. Damascus is positioning Syria as an alternative transit route for energy shipments despite still grappling with the aftermath of its own 14-year civil war.
Some oil shipments have already been trucked from Iraq into Syria and shipped to European markets via Syria’s Baniyas port, bypassing Hormuz. A key border crossing between northern Iraq and Syria reopened in April after being closed for more than a decade.
The overland route is less efficient and more expensive than shipping through the strait. The pipeline project would allow exporting a much larger volume of oil from Iraq to Syria and Turkey — and strip Tehran of its leverage.
