Key facts
- Iraq and Jordan are accelerating the $18 billion Basra-Aqaba oil pipeline project.
- The pipeline will transport Iraqi crude oil to the Red Sea port of Aqaba, bypassing the Strait of Hormuz.
- The project's urgency is amplified by the ongoing US-Iran war and its impact on energy supply routes.
- The pipeline is designed to carry up to 2.25 million barrels of crude oil per day.
- Disruptions to the Strait of Hormuz have previously led to oil price volatility and affected crypto markets.
Iraq and Jordan are accelerating the development of the long-delayed Basra-Aqaba oil pipeline, a $18 billion project intended to transport Iraqi crude oil to the Red Sea port of Aqaba, thereby bypassing the Strait of Hormuz. The urgency of this project has been significantly amplified by the ongoing US-Iran war, which has repeatedly exposed the vulnerability of traditional Gulf energy export routes.
Iraqi Prime Minister Ali Falih Al-Zaidi and Jordanian Foreign Minister Ayman Safadi met in Washington this week to advance the timeline for the 1,600-kilometer pipeline, which is designed to handle up to 2.25 million barrels of crude oil per day. The project has historically faced obstacles including financing gaps, security concerns, and political opposition, particularly from Iran-aligned factions within Iraq.
The strategic importance of alternative export routes has become paramount as Iran's actions have threatened to disrupt or close the Strait of Hormuz. Energy analysts note that the revival of the Basra-Aqaba pipeline gained momentum directly amid these disruptions. Concurrently, progress was also made on the Kirkuk-Baniyas pipeline to the Mediterranean via Syria during the same Washington visit.
The market consequences of Hormuz vulnerability have been severe, with oil prices surging during periods of heightened tension. For instance, oil prices rose 4% following recent Iranian attacks on Gulf allies, reinforcing Baghdad's drive for diversification. Earlier this year, a sharp 5% oil spike occurred after US strikes on Iran, impacting both oil and cryptocurrency markets, with Bitcoin experiencing significant drops during these escalations.
The successful implementation of the Basra-Aqaba pipeline could reduce Iraq's reliance on the Strait of Hormuz, potentially moderating the extreme oil-driven market volatility that has also affected crypto assets. US Special Envoy Tom Barrack's participation in discussions signals American interest in ensuring regional energy stability during the current geopolitical climate.