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Iraq signs a one-year oil transit deal with Turkey after Hormuz blockade
The interim agreement signed August 1 allows Iraq to route exports via the Iraq-Turkey Pipeline corridor for up to a year, after a prior deal expired July 27.
OilPrice reports that Iraq has faced an existential export problem because more than 90% of its annual budget depends on oil exports, and historically about 95% of that crude moved through the Strait of Hormuz, which remains effectively blockaded.
According to OilPrice, the disruption has already meant billions in lost near-term revenue for the OPEC second-largest oil producer, and it has filled Iraq’s domestic oil storage tanks to maximum capacity, forcing the shutdown of several production wells.
OilPrice adds that continued blockade risked longer-term damage to production, including loss of reservoir pressure, water infiltration, and corrosion.
To address the bottleneck, the outlet reports Baghdad had looked to route crude through northern Iraq into Turkey, but the key agreement for use of two pipelines expired on July 27. OilPrice says Baghdad and Ankara signed a one-year interim deal on August 1 that allows Iraq to move oil through the Iraq-Turkey Pipeline corridor, structured as two pipelines treated as a single unified mechanism under the 1973 Crude Oil Pipeline Agreement.
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