Iraq seeks to offset disruptions in Strait of Hormuz by boosting crude production and expanding alternative export routes.
Iraqi Prime Minister Ali al-Zaidi ordered oil companies on Monday to “operate 24 hours a day” to boost crude oil production, and accelerate the development of the country’s energy and export infrastructure amid the ongoing crisis in the Strait of Hormuz.
These measures are aimed to “ensure sustainability and increase production and export levels,” according to a statement from Al Zaidi’s office, following an expanded meeting of the Iraqi Ministry of Oil, where officials from the Ministry of Finance also attended.
Iraq, OPEC’s (Organization of Petroleum Exporting Countries) second-largest oil producer, reported in early August that its crude exports had declined by between 50% and 56% since the start of the war between the United States, Israel, and Iran began on February 28. The conflict has disrupted traffic through the Strait of Hormuz, a critical route for Iraqi oil exports, which led to the blockade of the Strait of Hormuz, the main route for the export of Iraqi crude oil.
In this regard, Al Zaidi also “ordered that the current circumstances be used to turn the crisis into an opportunity for success by developing the oil infrastructure and expanding export channels.”
Although the statement did not provide details on specific projects, officials discussed potential measures to “strengthen alternative export routes,” while the prime minister also called for the “expediting” of the oil pipeline the rehabilitation and development as well as the involvement of international companies in crude oil making.
Iraq’s Ministry of Oil said in early August that the country was producing approximately 2.7 million barrels of crude oil per day and exporting between 1.5 and 1.7 million barrels. That represents a significant decline from the 3.4 million barrels per day previously exported through the Strait of Hormuz before the war began.
Amid the crisis, Al Zaidi recently traveled to Washington, Iraq’s main ally alongside Iran, where he signed three memorandums of understanding with U.S. companies. The Iraqi government has also confirmed that talks are underway to develop an alternative export project through Aqaba, on Jordan’s Red Sea coast.
