Iraq and Turkey signed a one-year deal on Aug. 1 reopening the Iraq-Turkey Pipeline for up to 750,000 barrels per day, giving Baghdad a route around the Strait of Hormuz blockade that had cut off its main oil exports. The corridor has failed before: it sat closed for two and a half years in a dispute tied to Kurdish oil sales, and Turkey could still push for more concessions before the one-year term is up.
Iraq and Turkey signed a one-year interim deal in Ankara on Aug. 1, reopening the Iraq-Turkey Pipeline (ITP) corridor with a transit target of 750,000 barrels per day of Iraqi crude — far above the current 170,000-200,000 bpd moving through the route, though still only half its 1.5 million bpd total capacity. Turkish state firm BOTAS signed the deal with Iraq's State Organization for Marketing of Oil and the North Oil Company, reviving a mechanism that runs back to the 1973 Crude Oil Pipeline Agreement.
Hormuz blockade forced Baghdad's hand
More than 90% of Iraq's annual budget comes from oil exports. Historically around 95% of that crude has moved through the Strait of Hormuz, so the effective blockade of the strait turned finding an alternate route into an urgent problem for OPEC's second-largest producer. Domestic storage tanks filled to maximum capacity, forcing Baghdad to shut down several production wells — a risk that, the longer it continued, was more likely to permanently damage output through lost reservoir pressure.
The previous Turkey transit agreement had also expired on July 27, leaving Baghdad without its usual backup route just as the crisis deepened. Once the new deal was signed, tankers resumed quickly: the Valpiave loaded more than 600,000 barrels of crude at Ceyhan on Aug. 3, according to industry data.
Those new cargoes are headed to European and American buyers rather than the Asian markets that historically take about 80% of Iraq's oil exports. Demand for Iraqi crude oil remains strong in Western markets, partly replacing Russian and Black Sea supply and partly reflecting the broader shortfall from the Hormuz blockade.
Iraq and Turkey's pipeline has closed before
Flows between the two countries stopped entirely for two and a half years, from March 2023 to September 2025. That followed an International Chamber of Commerce ruling that ordered Turkey to pay Iraq $1.5 billion for breaching the 1973 pipeline agreement by letting Iraq's Kurdistan Region export oil independently of Baghdad. Before that halt, the northern route carried roughly 450,000 bpd of crude from the Kirkuk region to Ceyhan.
A senior energy source close to Iraq's Oil Ministry told Oilprice.com that Turkey has also asked for joint ventures across oil, gas, petrochemicals and electricity, along with compensation for the $1.5 billion arbitration award — and said Ankara could let the deal lapse or break its one-year term if it doesn't get what it wants.
Source: Oilprice.com
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