Alex Kimani
Iraq has been facing a critical oil export crisis since tanker traffic through the Strait of Hormuz largely seized up. About a month ago, Iraq reached a temporary agreement with Iran to allow its ships to sail through the waterway; however, additional war risk premiums for Persian Gulf transits have increased dramatically, rendering transport through the route uneconomical.
Unlike Iran, which relies heavily on a shadow fleet of tankers to transport its oil, Iraq lacks a large national fleet, forcing it to rely on third parties. Lack of shipping forced Iraq’s oil production to collapse by 80% to roughly 1.2 to 1.3 million barrels per day, turning into an existential crisis for a country that relies on oil for up to 95% of federal budget revenue. But now Iraq can breathe a sigh of relief after a key border crossing opened after remaining shut for more than a decade. The Rabia-Yarubiyah border crossing between Iraq and Syria has been reopened after remaining closed for 13 years, offering Iraq a potential alternative to the Strait of Hormuz. The border was initially closed in 2011 due to the Syrian civil war and was later seized by the Islamic State (ISIS) in 2014 before being retaken by Iraqi Kurdish forces.
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