The United States on Friday backed a new agreement between Iraq and Syria to rehabilitate an oil pipeline that would provide an alternative route for crude exports and reduce reliance on the Strait of Hormuz.
“The United States welcomes the engagement of a U.S.-led international consortium to execute the technical and financial aspects of this project,” the State Department said in a statement. “Upon rehabilitation, this groundbreaking project will have an initial transport capacity of 2 million barrels per day of crude oil.”
The agreement was signed during a U.S. Chamber of Commerce summit in Washington, D.C., with Energy Secretary Chris Wright presiding over the ceremony. The deal was signed by Basra Oil Company CEO Bassem Abdul Karim Nasr and Syrian Petroleum Company CEO Youssef Qablawi.
“There is so much room to drive improvement in Iraq, to raise oil production, to reduce dependencies on hostile neighbors, to bring freedom, prosperity, and abundant energy to the nation of Iraq,” Wright said at the signing.
The pipeline, which runs from Kirkuk in northern Iraq to Syria’s Mediterranean coast, was built to transport Iraqi oil to global markets but has been offline since the U.S. invasion of Iraq in 2003. According to the U.S. Energy Information Administration, the pipeline previously had the capacity to move roughly 700,000 barrels per day.
The project comes as countries across the region seek alternatives to the Strait of Hormuz, a critical shipping chokepoint through which roughly one-fifth of the world’s oil supply passes. When Iran imposed a blockade of the strait in March following strikes on the country by the United States and Israel, global energy markets were thrown into turmoil as shipments stalled and prices surged.
Before the blockade, only two major pipelines allowed Gulf states to bypass the Strait of Hormuz: Saudi Arabia’s East-West Crude Oil Pipeline, known as Petroline, and the United Arab Emirates’ Habshan-Fujairah pipeline.
Several Gulf countries have since moved to expand their pipeline networks. The UAE is developing a second pipeline to Fujairah that would increase its ability to export crude outside the strait, while Saudi Arabia is considering expanding its Red Sea pipeline capacity by an additional 2 million barrels per day.
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The Iraq-Syria pipeline project would add another potential export route while deepening economic ties between the two countries.
“Today’s announcement marks an important milestone for the region and for Syria-Iraq relations,” the State Department said. “The commitment of both countries to work jointly to rehabilitate and operate the pipeline, create a legal framework, and engage constructively with the consortium advances security and stability through prosperity, made possible by the vision and leadership of President Donald J. Trump.”