US Oil Firms Sign Deals with Iraq to Develop Alternative Shipping Routes
Chevron and other U.S. firms agreed to help Iraq build alternative export routes as analysts said seven regional pipelines could carry 60% of current Hormuz shipments by 2028.
- On Friday, U.S. companies signed roughly $60 billion in agreements with the Iraqi government at the U.S. Chamber of Commerce, including deals to develop alternative energy export routes away from the Persian Gulf.
- The initiative follows significant disruptions to tanker traffic in the Strait of Hormuz during the U.S.-Iran war, which caused Iraq's oil production to fall more than 50% since February.
- Chevron signed three agreements, including one for "investing in a pipeline that" would connect northern Iraq to Syria's Mediterranean coast, offering an alternative export route.
- Following the announcement, West Texas crude prices rose nearly 5% to $88 a barrel, while U.S. Ambassador to Turkey Thomas Barrack stated the deals aim to make the Strait "an afterthought."
- Analysts caution that pipelines take years to construct and do not resolve regional threats, as Bob McNally of Rapidan Energy warned Iran "can use weapons to attack loading facilities, pumping stations" and other infrastructure.
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Iraq has intensified its search for alternative ways of exporting energy after the fighting and partial closure of the Strait of Ormuz have complicated the supply of oil to world markets.
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