The figure that explains everything: 94% of Iraqi oil exports typically pass through the Strait of Hormuz. Oil accounts for 53% of the country's GDP and provides approximately 90% of the federal budget. When the strait effectively closed following the start of the American-Israeli war against Iran, Iraq faced the threat of budget collapse — not as a participant in the conflict, but as its economic victim.
From 93 to 10 million barrels
According to QuantCube Technology, which tracks vessel tonnage in ports, Iraqi exports have effectively come to a standstill since the war began. In April, Iraq managed to export only 10 million barrels through the Strait of Hormuz — compared to 93 million before the war started. Separately, as reported by FDD, oil production at southern fields fell approximately 80% in March — from 4.3 million barrels per day to 800,000.
The Kurdistan route: triple capacity — but is there anyone to negotiate with?
Iraq's Cabinet of Ministers approved accelerating exports through the Kurdistan-Turkey pipeline network: capacity is planned to increase by more than threefold — from 220,000 to 770,000 barrels per day. The route leads to the Turkish Mediterranean port of Ceyhan.
But this is where a risk emerges that barely appears in headlines.
"Ankara is withdrawing from the existing agreement with Baghdad on the Iraqi Pipeline in July 2026 after the expiration of the Oil Pipeline Agreement that has been in force since 1973."
Foundation for Defense of Democracies (FDD), May 2026
Turkey cites Iraq's systematic failure to meet its obligations to pump a minimum of 1.5 million barrels per day. Without a new agreement between Turkey and Iraq, the only pipeline exit bypassing Hormuz will be closed. In other words, Baghdad is simultaneously trying to triple pumping through a route whose agreement expires in just a few weeks.
UAE: building new infrastructure, but not until 2027
The situation in the UAE is structurally different. Abu Dhabi is accelerating construction of a new West-East pipeline to Fujairah, which will double ADNOC's export capacity bypassing Hormuz — the project is expected in 2027. This is a strategic decision, but not an emergency response: it doesn't help now.
According to the IEA's assessment, only Saudi Arabia and the UAE have operating pipelines with potential capacity of 3.5–5.5 million barrels per day bypassing the strait. Iraq, Kuwait, Qatar, and Bahrain lack such infrastructure.
What this means for the market
- Iraq — the most vulnerable economy in the region: oil accounts for more than half of GDP and 90% of budget revenues, and the only alternative to Hormuz depends on Turkish-Iraqi negotiations that began amid mutual claims.
- UAE already has an alternative route through Fujairah, but is building additional capacity with an eye toward the future.
- Global market has lost access to approximately 20 million barrels per day that normally pass through the strait — a quarter of global maritime oil trade.
The Kurdistan pipeline could become a lifeline for Iraq's budget — but only if Baghdad and Ankara sign a new agreement before July 2026. If negotiations reach a dead end, Iraq will be left without any functioning outlet for its oil.
