Report: Iraq begins exporting oil via Syria

Iraq has opened a land export route to bypass the Strait of Hormuz blockade triggered by the Iran-related conflict, rerouting a large volume of fuel oil via Syria to export terminals. This adjustment reflects the profound impact that changes in the Middle East geopolitical landscape can have on regional energy supply chains.

According to a Reuters report, Iraq’s State Oil Marketing Organization (SOMO) has signed contracts to export about 650,000 metric tons of fuel oil monthly via land routes through Syria from April to June.

Iraq’s Ministry of Oil said on Wednesday that this move is intended to support the national economy, increase fiscal revenue, and that transport volumes will be gradually raised to expand export capacity.

Syria’s Petroleum Company confirmed that the first shipment of Iraqi fuel oil has arrived at the Banias refinery storage tanks via the Al-Tanf border crossing, and that unloading operations are progressing as planned. Meanwhile, Iraq had previously resumed exporting crude oil via Turkey’s Ceyhan port, with multiple export channels proceeding in parallel.

** Conflict-driven blockade forces route switching **

In February this year, the United States and Israel carried out airstrikes on Iran, causing the Strait of Hormuz to close.

Citing sources, Reuters said that although this overland corridor has not been used for decades, the end of the Syrian civil war and the sea disruptions caused by regional conflicts have made it the most viable alternative option, even though transport costs are higher.

Before the outbreak of the conflict, Iraq mainly exported fuel oil via the port of Hormuz/Al-Horzenbaier? along the southern Arabian Gulf coast, shipping by sea to reach global markets. The Hormuz blockade cut off this traditional route, forcing Iraqi oil companies to look for alternative export solutions.

An Iraqi energy official said the country’s largest southern oilfield output has fallen by nearly 80% from earlier levels, dropping to about 800,000 barrels per day. Tank farm capacity saturation and transportation difficulties have also led Iraq and other oil-producing countries to compress production one after another.

** Rapid expansion of the land corridor **

A member of the Anbar provincial council, Adnan al-Kubaisi, said on Tuesday that more than 60 Iraqi oil tankers have started entering Syria via the Al-Walid border crossing—this strategic port has reopened after being closed for more than a decade.

He expected the number of transit tankers to rise to between 600 and 700 in the future.

Mujahid Mardhi Al-Dulaimi, head of the Al-Walid subdistrict, said that currently more than 150 tankers are waiting to enter Syria, and that the expected transit volume would reach about 500 per day.

Syria’s Petroleum Company said that this transport is part of an “integrated supply plan.” After the cargo arrives, it will be transferred onto specialized tankers at the Banias port for shipment to the final destination, adding that the infrastructure and operations teams are functioning efficiently.

** Contract details and discount structure **

According to Reuters, SOMO awarded time-period contracts to four Iraqi oil suppliers. The contracts were signed against the backdrop of the Iran conflict in February and the export disruptions it triggered.

Two of the traders will export a combined 720,000 metric tons of fuel oil from Iraqi northern, central and southern refineries within three months, with discount ranges of $160 to $170 per metric ton. The third trader will export 401,000 metric tons, with a discount of about $160 per metric ton. The fourth received a smaller-volume contract of 90,000 metric tons, with a discount of about $155 per metric ton.

The steep discounts reflect high land transport costs and the urgency for Iraq to absorb inventory in an environment where export channels are constrained.

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