Iraq seeks oil export alternatives as Strait of Hormuz blockade cuts revenues

Iraq is looking for alternative ways to export oil after the continued blockade of the Strait of Hormuz cut off most of its sea-based trade. The disruption has hit a key source of state income and left Baghdad facing a widening financial squeeze. Prime Minister Ali al-Zaidi raised the issue in a speech to the United Nations General Assembly on Friday.

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According to the supplied report, Iraq says it has been unable to export about 90% of its oil via the Gulf. Officials say the country has lost about $60bn in oil revenues since the war between the United States and Iran began. Al-Zaidi said the fallout over shipping and maritime freedom in the strait had triggered a crisis of rising global oil prices.

The loss of export income has had direct domestic consequences. Oil revenues account for about 90% of Iraq's federal budget, and the decline has affected the government's ability to pay salaries. The pressure has also prompted protests in Baghdad, while officials consider austerity measures that are likely to be unpopular with the public.

The report says the Strait of Hormuz remains effectively closed for the foreseeable future. The crisis matters because Iraq's economy is heavily dependent on oil and because the Strait of Hormuz is one of the world's most important energy chokepoints. Any prolonged disruption there can affect global supply, prices and government finances far beyond Iraq.

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For Baghdad, the problem is not only immediate revenue loss but also the lack of a quick replacement route for exports. Al-Zaidi said Iraq could try to boost production in coming years and diversify export routes. The options mentioned include developing the Iraq-Turkiye Pipeline and exploring possible links with Jordan and Syria.

But the report also quotes Iraqi political and security analyst Sarmad Al-Bayati as saying those alternatives are unrealistic and impractical at present, leaving no real short-term solution if the situation in the strait does not change. What remains unclear is how long the blockade will last and whether any of the proposed export routes can be expanded quickly enough to ease the pressure. The report says Iraq has relied on inefficient shipping arrangements in the past, but gives no indication that these can replace the Gulf route in the near term.

For now, the government faces a combination of lost revenue, budget strain and public discontent while the wider conflict continues.

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