Iraq’s oil sector has weathered wars, sanctions, and political turmoil, but nothing prepared the country for the shock it faced when the U.S.–Israeli war with Iran closed the Strait of Hormuz. Overnight, Iraq lost the export route that carries nearly all of its crude—an economic lifeline that funds 90 percent of the state’s budget. The crisis was triggered by war, but as our new report shows, the real story is deeper and far more self‑inflicted.
Iraq’s Oil Export Crisis: Risks and Policy Priorities
For decades, Iraq has known that relying almost entirely on a single maritime chokepoint was a high-risk strategic gamble. Yet successive governments failed to rebuild the Iraq–Turkey Pipeline after ISIS destroyed it, dithered about plans for new north–south pipelines, and allowed political infighting and Iranian pressure to derail the long‑planned Basra–Aqaba route. When the Strait closed, Iraq had no fallback. As the report notes, “the country had no meaningful redundancy,” and the consequences were immediate: a fiscal emergency, collapsing exports, and desperate reliance on trucking crude hundreds of kilometers just to keep minimal revenue flowing.
This briefing explains how Iraq reached this point, what limited steps it took to adapt, and why those measures were never more than stopgaps. It also lays out the political failures—more than the technical ones—that left Iraq exposed to a predictable crisis.
Most importantly, the report argues that Iraq now faces a choice: treat this shock as a one‑off disruption, or finally build the diversified export system it has discussed for decades. With Baghdad moving to revive the Basra–Haditha corridor, there may be a rare window for real change.
If you want to understand how Iraq’s most important industry became so vulnerable—and what it will take to prevent the next crisis—this report is essential reading.