Iraq’s Oil Dilemma: Limited Access to Hormuz, Growing Need for Alternatives

Iraq 01:09 PM - 2026-08-26

Iraqi Worker Operates Valves at Nihran Bin Omar Oil Field in Basra.

Iraq has secured limited access for its oil exports through the Strait of Hormuz after Iran granted special permission for a number of Iraqi oil tankers to pass through the strategic waterway, providing Baghdad with a partial outlet for its crude exports amid continued disruptions to regional shipping.

Iran’s decision followed repeated requests from the Iraqi government through diplomatic channels. Iran’s state news agency IRNA reported on 22 August that granting special permission for Iraqi tankers was among Baghdad’s main requests during Iranian Parliament Speaker Mohammad Baqer Qalibaf’s visit to Iraq.

Iraqi President Nizar Amedi subsequently confirmed that Iran had facilitated the passage of vessels carrying Iraqi oil through the strait in recent days, saying Baghdad had discussed the issue directly with Iranian officials. However, he described the situation as complicated amid the wider regional tensions affecting maritime traffic.

A Critical Route for Iraqi Oil

The development is particularly significant for Iraq because the country has historically relied heavily on the Strait of Hormuz to transport crude from its southern export terminals to international markets.

Before the outbreak of the conflict, Iraq was producing around 4 million barrels of oil per day, with the majority of its seaborne exports leaving through terminals in the Basra region and passing through Hormuz. The disruption to the waterway has therefore had a disproportionate impact on Iraq compared with some other Gulf producers that have alternative export routes.

In April, Iraq’s then Oil Minister Basim Mohammed said the country exported around 10 million barrels of oil through the Strait of Hormuz during the month, compared with approximately 93 million barrels per month before the conflict. The dramatic reduction illustrated the scale of the disruption facing Iraq’s oil industry.

The restrictions have also affected production. Iraq has had to reduce output because storage capacity at southern oil fields and export terminals has become increasingly constrained when crude cannot be shipped overseas.

Basra Oil Company chief Bassem Abdul Karim said in April that Iraq could restore crude exports to approximately 3.4 million barrels per day within a week if the Strait of Hormuz reopened and the conflict ended.

Iraqi Basrah Crude Has Continued to Reach International Markets

Despite the severe reduction in shipping activity, some Iraqi crude has continued to make its way through Hormuz.

Reuters reported earlier this month that only four vessels transited the Strait of Hormuz on one Thursday, including a supertanker carrying approximately 2 million barrels of Iraqi Basrah crude. The vessel was among a very limited number of crude tankers able to navigate the waterway amid heightened security risks and uncertainty over shipping permissions.

The passage demonstrates that Iraqi oil exports have not been completely halted, but rather reduced to a fraction of their normal level.

Shipping traffic through Hormuz has remained dramatically below pre-conflict levels. Reuters reported that only seven commodity vessels passed through the strait on 20 August, compared with much higher traffic before the conflict. No large crude carriers or LNG tankers were recorded among those transits on that day.

Iran Grants Special Permission to Iraqi Tankers

The latest Iranian decision represents a more explicit arrangement for Iraqi oil shipments.

According to Reuters, Iran granted permission for several Iraqi oil tankers to pass through Hormuz after Baghdad repeatedly raised the issue through different channels. The Iraqi government has been seeking guarantees that its oil exports can continue despite the wider confrontation surrounding the strategic waterway.

The arrangement is particularly important because Iraq has limited alternatives for moving its southern crude to international markets.

Unlike Saudi Arabia and some other Gulf producers, Iraq cannot easily redirect all of its exports through alternative pipelines or terminals. This leaves its southern oil sector highly exposed to any prolonged disruption in Hormuz.

Iraq Searches for Alternative Export Routes

At the same time, Baghdad has accelerated efforts to reduce its dependence on the Strait.

Iraqi Prime Minister Ali al-Zaidi said the country was working to expand exports through Türkiye’s Ceyhan port and was also considering routes through Syria’s Baniyas port and Jordan’s Aqaba port.

Iraq and Türkiye have also reached a one-year agreement aimed at increasing oil exports through the Kirkuk-Ceyhan pipeline. The agreement is intended to provide Iraq with an additional outlet for crude at a time when southern exports remain vulnerable to disruptions in the Gulf.

The strategy reflects a growing recognition in Baghdad that reliance on a single maritime chokepoint creates significant economic risks, particularly during periods of regional conflict.


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