U.S. Firms & Iraq Sign Deals Worth $ 60 Billion To Construct New Oil Shipping Routes Beyond Hormuz

U.S. firms have entered into long-term agreements with the Government of Iraq to develop alternative routes for shipping oil from the Gulf region, as the future of Hormuz remains uncertain.

The deals and agreements, worth $ 60 billion, span not only the defence sector, but also healthcare, infrastructure, and communications.

It remains unclear how much time it will take for the agreements to turn into reality, given that an oil pipeline running through one country takes atleast two to three years to build and become operational, and the new pipelines would run across two or more nations.

The U.S-Iran war has revealed the vulnerability of the Strait of Hormuz, and Iran’s geographical proximity to the waterway means that the Islamic Republic can exercise its control over it, as seen in the current conflict, which makes it an unreliable route for oil and gas shipments in the future.

Thomas Barrack, U.S. Ambassador to Turkey, said the new oil pipelines built under the new agreements “will make the Strait of Hormuz an afterthought.”

After the deals were signed, Iraqi Prime Minister Ali Falah al-Zaidi met the executives of Chevron in Houston and urged them to invest in Iraq, adding that they seek long-term partnerships and not just contractors to finish projects.

Al-Zaidi said he is committed to cooperating and supporting the U.S Chamber of Commerce, calling it an important place where fruitful economic decisions are made.

Chevron has signed three deals with the Iraqi Government.

Jake Spiering, Chevron’s president of corporate business development, said two deals are meant to boost oil production, and the third would focus on building a pipeline network which would create an alternative to Hormuz to transport oil to the world markets.

On Friday, the U.S State Department welcomed an agreement between Syria and Iraq to reconstruct the Iraq-Syria crude oil pipeline.

The pipeline will link Iraq’s Basra to Haditha and will go all the way to Turkiye’s Ceyhan Port and the Port of Baniyas on the coast of Syria, carrying almost 2 million barrels of oil per day.

Analysts at Goldman Sachs said that 7 pipelines which are under development could, by the end of 2028, carry around 60% of the oil currently shipped through the Strait of Hormuz.

The pipelines will carry a total of 14 million barrels of oil per day. Around 23 million barrels of oil were shipped through the Strait of Hormuz before the U.S-Iran war began.