Thousands Of Trucks Haul Iraq’s Oil Through Syria In Sign Of Hormuz Legacy

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Elsewhere, the United Arab Emirates has already been able to partially bypass the strait using an existing pipeline to keep some crude moving through ports on its east coast, and is accelerating the construction of another pipeline while planning a major expansion of eastern ports outside of Hormuz.

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Saudi Arabia has also turned to a pipeline to the port of Yanbu on its west coast, and Kuwait has been in talks with its neighbors about expanding their pipeline systems to handle its barrels.

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Iraq is also working on plans to build new crude oil pipelines and rehabilitate older ones to avoid Hormuz. The Iraqi fuel oil helped Syria export 720,000 tons in June, according to data from analytics firm Vortexa. That made it the biggest shipper of the product in the Middle East, accounting for 28% of volumes.

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Trucking Fleet

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A huge number of trucks are needed to match what a ship handles. Each truck carries around 20 tons, or 135 barrels, on the four- to six-day drive to the ports in Syria and Jordan. In comparison, about 300,000 barrels could be loaded onto a vessel that shuttles cargoes out to a bigger tanker offshore holding around 700,000 barrels.

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Traders involved in the market estimate the Syrian trucked flows exceeded 600,000 tons of fuel oil last month, with the Mediterranean port of Baniyas receiving thousands of these vehicles. Lytton SA, a Geneva-based trading house with links to Iraq, has handled the majority of the trucking, according to people familiar with the matter who asked not to be identified as the details are private.

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Meanwhile, around 100,000 tons of fuel oil a month are being trucked via Jordan’s Red Sea port of Aqaba, with some volumes marketed by Iraq’s Rania Group, the people said.

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Iraq’s oil ministry points to even bigger flows, estimating that 1 million tons of fuel oil exports were trucked to Syria and Jordan in June, up from about 500,000 tons in May.

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Lytton declined to comment. Rania didn’t respond to an email seeking comment and couldn’t be reached by phone.

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A key question is whether Iraq also reroutes meaningful volumes of crude exports. The country was OPEC’s second-biggest oil producer before the war and its crude exports are far bigger than its fuel oil shipments.

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“It does potentially presage a longer-term movement of crude,” though that would need improved pipeline infrastructure to lessen Iraq’s reliance on Hormuz, 3TEN32’s Alkadiri said.

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One possibility is the Kirkuk-Baniyas pipeline that has been shut for more than two decades. Thomas Barrack, US special envoy for Syria and Iraq, convened discussions with officials from both countries as well as companies including Chevron Corp. about reviving the pipeline, Bloomberg reported Tuesday.

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A State Department official confirmed the US government is supporting efforts by Iraq and Syria to enhance trade routes through rehabilitating the pipeline and expects American companies to play a role in its construction. However, building pipelines in Syria would take time and face challenges, including navigating areas where Islamic State cells remain active.

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In the shorter term, even if the Middle East conflict ends and Hormuz traffic returns to normal, Iraq’s trucking flows could continue as the country keeps exports diversified, traders say.

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“The war has concentrated minds on the importance of diversification of export routes,” Alkadiri said. “And really in a sense has returned Iraqi thinking that was prevalent in the 1980s, which was ‘If the Hormuz route is vulnerable, what are the other options?’”

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—With assistance from Julian Lee and Julius Domoney.

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