Iraq has lost tens of billions of dollars in revenue since the Iran war began in late February, after the closure of the Strait of Hormuz slashed oil exports, according to an aide to the country’s leader.
Several development projects in Opec’s second-largest oil exporter have stalled because of the cash crisis as crude sales account for the bulk of Iraq’s income, said Mudhar Saleh, a financial adviser to newly installed prime minister Ali Al-Zaidi.
Saleh said Iraq’s crude oil export volumes have fallen to below 10 percent of pre-war levels as the bulk of such shipments pass through Hormuz, the Gulf’s only gateway that would normally supply the global market with 20 million barrels per day (bpd) of crude.
Saleh said in an interview with Iraq’s Al-Forat TV that Iraq’s losses have reached $40-45 billion since the start of the conflict “as a result of a sharp decline in its oil exports and the halt of some development projects”.
“The government’s priority now is to protect its known red lines, foremost of which are the salaries paid to public servants, pensions and social care, which directly benefit at least 9 million Iraqis,” Saleh said.
Iraq controls the world’s fifth-largest proven oil reserves and pumped nearly 4.2 million bpd of crude before the war between Iran and the US-Israeli alliance erupted on February 28.
During a trip to the US earlier this month, Al-Zaidi announced a series of agreements with US oil companies to maintain and expand production from Iraq’s oil and gas fields, but it is not clear how the country will bring existing or additional barrels to market.
In June, Iraqi officials unveiled plans to boost oil exports from southern oilfields to bypass Hormuz by using pipelines and trucks north through Turkey.
Al-Zaidi is due to visit Turkey on Tuesday, and a possible agreement to extend Iraqi exports through a pipeline from the country’s northern fields through Turkey to the Mediterranean port of Ceyhan is likely to be on the table.
Iraq has also approved plans to build a pipeline network extending from the southern oil hub of Basra to Hadithah in the western Al-Anbar governorate and then to Turkey in the north and the Syrian port of Baniyas.
The project has been awarded to a consortium grouping Qatar’s UCC Holding, and the US companies Chevron and TI Capital.