TEMPO.CO, Jakarta - Iraq has begun exporting oil through neighboring Syria as it looks to reboot an economy that has been dealt a devastating blow by the current conflict in the Middle East.
On Wednesday, the Iraqi oil ministry said it was "cooperating with Syria to ensure oil reaches export outlets" and that "export operations would gradually increase to boost Iraq's economy."
Iraq's state-owned oil marketer SOMO announced that it had signed a contract to export 50,000 barrels per day of Basra medium crude through Syria to the Mediterranean and to customers in Europe, with director general Ali Nazar saying there were plans to increase volumes.
Iraq, which shares a long eastern border with Iran, relies upon oil exports for 90 percent of its revenues. The vast majority of Iraqi oil is exported via the southern port of Basra and the Strait of Hormuz — which Iran has effectively cut off in response to U.S.-Israeli attacks.
Since the war started, oil production in southern Iraq has fallen by more than 70 percent, with output across the wider Basra province dropping from 3.1 million barrels per day to roughly 900,000, Bassem Abdul Karim, the head of the state-run Basra Oil Company, told the Associated Press (AP) this week.
With oil fields, energy infrastructure, and U.S. military bases inside Iraq all being targeted by both Iran and Tehran-backed Iraqi militias, many foreign workers have also fled the perilous situation.
According to Abdul Karim, Iran has offered assurances that Iraqi crude can safely transit the Strait of Hormuz. However, since Iraq lacks its own tanker fleet and depends on chartered vessels sailing under foreign flags, shipments ultimately hinge on whether tanker owners are willing to accept the risks of making the journey — and most are not.
As for the northwestern land export routes via Syria and Jordan, Abdul Karim said pipeline capacity is limited while trucking by road is costly and inefficient.
But with experts warning that the Iraqi government only has enough cash reserves to see it through until mid-May without a resumption in oil sales, it's currently the only option open to Baghdad.
Read: Global Markets Fall as Oil Prices Spike on Trump's Iran Warning
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