At this point, the blockade of the Strait of Hormuz due to the war in Iran is a reality that the world assumes with resignation. But while the West looks askance at the geopolitical tables, in Iraq the situation has gone from concern to financial panic.
The phenomenon. As you point out oil priceUnlike neighbors such as Saudi Arabia or the United Arab Emirates, Iraq does not have alternative routes to avoid Hormuz, nor does it have a sovereign wealth fund to serve as a cushion. Its dependence on oil revenues is absolute. Today, cornered and with water up to its neck, Baghdad has had to swallow pride and look north to resurrect a problematic and rusty infrastructure as the only way to survive.
A country without space to store its own crude oil. As detailed Reutersproduction in the main fields in southern Iraq – the country’s true economic engine – has plummeted by 70%. They have fallen to just 1.3 million barrels per day (bpd) simply because oil tankers cannot leave the Gulf and storage tanks are overflowing.
As pointed out by an analysis in Argus MediaIraq has had to turn off the tap of about 3 million bpd, completely stopping giant fields such as West Qurna, Majnoon or Halfaya. Faced with this scenario, the emergency solution has been to dust off the old oil pipeline Kirkuk-Ceyhanwhich connects the north of the country with Türkiye. This is a route that had been inactive due to damage since 2014 and that has been a constant target of sabotage since the 2003 invasion.
From propaganda to damage control. Facing the gallery, the official speech is triumphalist. According to a statement collected by state agency Iraqi News Agency (INA)the reopening of the Sarlo pumping station has been celebrated by the North Oil Company as a resounding “technical and administrative success”. For the Iraqi authorities, recovering this export route represents a “strong return to the forefront” that demonstrates, they say, the country’s iron will and the ability of its engineers to resurrect a strategic infrastructure paralyzed for years.
However, the reality behind the government window is much more precarious. Does this mean that Iraq has solved its problem? At all. Faced with institutional optimism, geopolitical analyst Bachar el Halabi offers a harsh reality check: “This is not a recovery of exports, it is damage control.” El Halabi explains that this pipeline will initially provide about 200,000 or 250,000 bpd of federal flow from Kirkuk. A figure that is useful for the heads of the state agency, but that is a tiny fraction if we compare it with the 3.4 million barrels that Iraq usually exports from the south in peacetime.
The global market has barely blinked. According to oil pricethe news of the reopening caused Brent crude to drop slightly from $103 to $101 per barrel, but warns that this volume will not make any real difference to global supply. The final diagnosis of El Halabi is blunt: “Iraq’s oil system has been totally exposed. This agreement is for stabilization, it is not a resolution.”
The historic pact (and the call from Washington). To ensure that crude oil flows again to Türkiye, Baghdad has had to sit down to urgent negotiations with its historical internal rivals: the Kurdistan Regional Government (Erbil). In this unprecedented pact, federal production from Kirkuk will travel alongside that from Kurdistan through the same tube, the revenue will go directly to federal coffers in Baghdad, and a joint committee has been created to oversee it.
But this agreement has not emerged from nowhere. The United States has pulled the strings in the shadows. So much Reuters as analyst Bachar el Halabi confirm that there was a direct intervention from the White House: a phone call between President Trump’s envoy, Tom Barrack, and the Kurdish Prime Minister, Masrour Barzani, was the key that managed to break the historic blockade between Baghdad and Erbil.
The shadows of the agreement. Despite the handshake, the pipeline is surrounded by threats. The first major obstacle is physical security: pro-Iran militias have been attacking energy infrastructure in Kurdistan for some time. Can Baghdad really guarantee international oil companies that their facilities will be safe from “mistakes” or deliberate attacks?
Furthermore, the political wounds remain open. lTensions had recently escalated because Baghdad attempted to impose a new electronic customs system, something Erbil saw as a frontal attack on its autonomy. For its part, Kurdistan had been accusing the federal government of imposing a “suffocating economic blockade” on them.
And hanging over all of this is a diplomatic humiliation that no one wants to mention out loud. Baghdad, being the Arab capital politically closest to Tehran, had to wait until the 18th day of the war to dare to ask Iran for permission to move some of its own oil tankers through the Strait of Hormuz.
Hostage to its own geography. Iraq has managed to save a match point critical short-term financial. Thanks to emergency diplomacy and strong pressure from Washington, the country will be able to enter the minimum dollars necessary to pay public salaries and avoid an imminent social collapse. However, this crisis has exposed its greatest weakness. Lacking alternative infrastructure and economic diversification, Iraq is confirmed as the great hostage of the war in the Middle East; an oil giant that, to survive, has had to entrust its destiny to an old patched pipe.
Image | Photo by SELİM ARDA ERYILMAZ on Unsplash
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