US Firms Sign $60Bn Deals With Iraq to Build Oil Routes Bypassing Strait of Hormuz

American companies have signed roughly sixty billion dollars' worth of agreements and partnerships with the Iraqi government, including deals aimed at creating alternative export routes for oil that bypass the Strait of Hormuz, which Iran has repeatedly sought to close since the outbreak of the US-Iran war in February, the Associated Press reported.

The agreements were signed at the US Chamber of Commerce on Friday and span several sectors, including healthcare, communications and infrastructure. However, the oil pipeline deals drew the most attention given the disruption to global energy markets caused by the conflict. West Texas crude rose nearly five per cent to 88 dollars a barrel on Friday afternoon, up from around 67 dollars before the war began, having peaked above 110 dollars in early April before retreating following a short-lived truce.

Chevron signed three agreements with the Iraqi government, two focused on boosting oil production and a third centred on building a new pipeline export route out of Iraq. Thomas Barrack, US Ambassador to Turkey, said the pipeline programme would make the Strait of Hormuz an afterthought for global energy logistics. The deals followed a meeting on Thursday between Iraqi Prime Minister Ali Falah al-Zaidi and Chevron executives in Houston, where al-Zaidi urged the company to expand and accelerate its investment. Speaking on Friday, he said Iraq was looking for long-term partners and investors rather than contractors.

Pipeline routes

The State Department separately welcomed an agreement between Iraq and Syria to rehabilitate and reconstruct the Iraq-Syria crude oil pipeline, describing it as a priority infrastructure project and welcoming the involvement of a US-led international consortium to manage its technical and financial aspects. The pipeline is designed to run from Basra in southern Iraq through Haditha in the west, continuing to Turkey's Ceyhan port and Syria's Baniyas coast, with a projected capacity of around two million barrels per day.

Analysts at Goldman Sachs estimate that seven regional pipelines currently under development could collectively carry around sixty per cent of the oil previously shipped through the Strait of Hormuz by the end of 2028, or roughly fourteen million barrels per day. However, Goldman noted that pipelines in even a single country take at least two and a half years to build, meaning viable alternatives remain some way off. With the strait disrupted, some Iraqi oil has already been trucked overland into Syria and shipped to European markets via Baniyas, a costlier but functional workaround while the pipeline projects advance.