According to WPB, Iraq’s oil minister said on August 8 that the country’s crude exports have fallen by 75% from prewar levels as restrictions at the Strait of Hormuz continue to disrupt access to Iraq’s southern export terminals. Hayan Abdul-Ghani said Iraq is now exporting only about one-quarter of the approximately 3.5 million barrels per day it shipped before the regional conflict began. That statement implies current exports of roughly 875,000 barrels per day, although publicly available shipping estimates can differ depending on the measurement period and methodology.
The distinction is important because the 75% figure is a statement by Iraq’s oil minister rather than an independently calculated August 8 shipping estimate. However, the scale of the decline is consistent with the broader operational damage documented since the Hormuz crisis began. In March, Iraq’s crude exports fell to around 800,000 barrels per day compared with 3.334 million barrels per day from its southern fields in February, while production from the main southern fields dropped by about 70% to 1.3 million barrels per day as storage filled and tanker access deteriorated.
The August statement therefore does not describe a new structural problem. It confirms that, despite periods of partial recovery, Iraq has still not restored a normal export system. July had shown some improvement: Iraqi exports doubled from June as nine additional very large crude carriers loaded cargoes. But the recovery weakened again as regional fighting intensified in the second half of July and vessel traffic through Hormuz remained far below normal.
That volatility is now one of the central problems for Baghdad. It is no longer enough for a tanker to complete one successful passage. Iraq requires a repeatable cycle in which empty vessels can enter the Gulf, reach Basrah loading facilities, take cargo and exit Hormuz without unacceptable security, insurance or financial exposure. The current system remains too unpredictable to support anything close to the country’s previous export rate.
Shipping activity at the beginning of August illustrates the constraint. Between August 3 and August 6, only 33 vessels were recorded transiting Hormuz, compared with 50 over the same period a week earlier. Only six crude tankers exited the strait during that period. Several Chinese and Indian refiners were seeking vessels to load discounted Iraqi crude, but shipowners remained reluctant to accept the voyages.
The cost of finding a willing vessel has become extraordinary. On August 7, India’s Reliance Industries agreed to pay approximately $23 million to $25 million to charter a supertanker capable of carrying 2 million barrels of Iraqi crude. The fixture was priced at Worldscale 1200, roughly 12 times the benchmark freight rate. Before the war, a comparable voyage cost approximately $2 million.
This is one of the clearest demonstrations of how badly Iraq’s export economics have been distorted. A cargo can still be physically loaded at Basrah, but the cost of moving it through Hormuz has become large enough to alter the value of the crude itself. Iraq’s state marketer has responded by offering unusually deep discounts to attract buyers willing to assume the transportation risk.
For August-loading cargoes, Basrah Medium has been offered at discounts of approximately $25 to $27 per barrel against the relevant destination benchmarks, while Basrah Heavy discounts have ranged from about $27.80 to $29.80 per barrel. These are not ordinary commercial adjustments. They represent a substantial transfer of value from the producer to the buyer in order to compensate for freight, insurance and security risk.
The combination of a $25–$30 crude discount and freight approaching $25 million per VLCC shows why the crisis cannot be measured solely by export volume. Iraq may succeed in moving some barrels, but it is doing so at an economic cost far above normal conditions. The more important measure is therefore not simply whether a tanker leaves Basrah, but how much value Iraq must surrender to make that voyage commercially acceptable.
The oil minister also said Baghdad’s discussions with Iran over the passage of Iraqi oil shipments have not yet produced an operational arrangement. That leaves Iraq exposed to a maritime corridor over which it has little practical control.
This dependence explains why alternative export routes have moved from long-term infrastructure planning to a central element of Iraq’s energy strategy.
Turkey is currently the most advanced alternative. Iraq and Turkey recently signed a one-year agreement intended to increase crude exports through the pipeline system toward the Mediterranean port of Ceyhan. The agreement targets a minimum of 750,000 barrels per day through the corridor, although achieving that level depends on pipeline capacity, northern production, infrastructure and continued implementation of the agreement. Before the conflict, roughly 3.5 million barrels per day of Iraqi crude was exported, most of it through southern terminals, so even a major expansion through Ceyhan would replace only part of the lost Gulf capacity.
Baghdad is simultaneously developing the Basra–Haditha corridor. Work on the approximately 700-kilometer pipeline is intended to create a central connection from southern oil production toward several potential export outlets. The government has identified Ceyhan in Turkey, Baniyas in Syria and Aqaba in Jordan as potential destinations linked to this broader strategy. Around $1.5 billion had been allocated to the Basra–Haditha project, although further progress depends on additional funding and construction.
The Syrian route is especially important because it is no longer entirely theoretical.
Iraq has already been trucking large volumes of fuel oil across Syria to the Mediterranean port of Baniyas. Contracts awarded earlier in the crisis covered approximately 650,000 metric tons of fuel oil per month, and facilities at Baniyas were expanded to handle large tanker-truck flows. Plans were also developed to introduce crude oil and naphtha through the Syrian corridor.
By July, the Baniyas system had progressed from an emergency regional route into an international export corridor. Iraqi fuel oil moved by truck to Baniyas was loaded onto Aframax tankers and delivered to customers in the Mediterranean and the United States. The terminal had been loading approximately one Iraqi fuel-oil cargo every seven to 10 days, supported by roughly 900 tanker trucks unloading at the facility each day.
But the distinction between current and future capacity is important. As of the latest detailed operational reporting in July, exports from Baniyas were still limited to Iraqi fuel oil. Facilities had been prepared to handle crude and naphtha, but those exports had not yet begun.
Aqaba is farther from becoming a large-scale solution. The planned route toward Jordan’s Red Sea coast offers one of the most strategically valuable possibilities because it would bypass Hormuz entirely. However, the proposed Basra–Aqaba pipeline remains an infrastructure project rather than an immediate replacement for southern maritime exports. Iraq can accelerate planning, but it cannot instantly create millions of barrels per day of new pipeline capacity.
For the bitumen market, these changes are significant because Iraq’s logistics problem extends well beyond crude oil.
The most immediate effect is on marine access. Iraqi bulk bitumen and other heavy-product cargoes exported from Gulf terminals face the same basic geographic constraint as crude: ships must enter the Gulf, reach their loading point and then leave through Hormuz. A specialized bitumen carrier therefore has to accept the same regional security environment that has pushed crude tanker freight to extraordinary levels.
The situation can be even more restrictive for bulk bitumen because the available fleet is much smaller. Bitumen requires heated storage and transportation, and bulk cargoes normally move in specialized vessels capable of maintaining the product at temperatures suitable for pumping and discharge. The pool of substitute vessels is therefore much narrower than in the crude tanker market. Bitumen itself is generally produced from heavy refinery streams following atmospheric and vacuum distillation of suitable crude.
A dramatic increase in crude-tanker freight does not mean bitumen freight will increase by exactly the same amount. The vessel classes, parcel sizes and charter markets are different. But the underlying signal is relevant: when shipowners demand extreme compensation simply to enter and leave the Gulf, specialized petroleum transportation is also likely to remain expensive and difficult to secure.
This can produce an unusual pricing structure in the Iraqi bitumen market. A supplier struggling to move product may have to reduce the price at origin to attract a buyer. At the same time, the buyer can face a much higher delivered cost because freight, insurance, waiting time and security premiums have increased. FOB values can therefore weaken while delivered prices rise.
The impact on bitumen production itself requires much greater caution.
There is no current public evidence confirming that Iraq’s bitumen production has fallen by 75%, or by any comparable percentage, because crude exports have declined. Export performance and refinery throughput are not the same measure. During the severe March disruption, Iraq reduced upstream production as crude storage reached capacity, but officials said the remaining production was being directed toward domestic refineries.
That means a collapse in crude exports does not automatically cause an immediate collapse in refinery runs. Baghdad has a strong incentive to protect domestic refining because fuel supply is essential to the economy. As long as refinery crude requirements are prioritized, the country could continue generating heavy refinery streams even while seaborne crude exports remain severely restricted.
The risk increases if the crisis persists. If upstream production must remain suppressed for an extended period, refinery operating rates could eventually come under pressure depending on field allocation, storage capacity and crude availability. Lower refinery throughput would generally mean less atmospheric residue and vacuum residue entering the downstream system, potentially reducing the feedstock from which paving-grade bitumen can be manufactured. That is a risk scenario, not evidence that such a decline has already occurred.
The alternative-route strategy also needs to be interpreted differently for bitumen than for crude.
The Kirkuk–Ceyhan pipeline is a crude-oil route; it does not transport finished bitumen. Increasing Iraqi crude exports through Ceyhan can strengthen the country’s overall energy-export resilience, but it does not automatically create a Mediterranean outlet for Iraqi bitumen. Moving finished bitumen through Turkey would require separate road, rail, storage and loading arrangements.
Baniyas may ultimately have greater direct relevance to heavy products. Iraq has already demonstrated that fuel oil can be transported overland by tanker truck to Syria and re-exported through the Mediterranean. That proves that a heavy petroleum product can bypass Hormuz through a land–sea combination. However, the public evidence reviewed for this report does not show regular Iraqi bitumen exports through Baniyas. Any extension of the model to bitumen would require suitable heated road transport, storage and marine-loading infrastructure.
Packaged bitumen has more flexibility. Drums, jumbo bags and containerized material can move by truck through neighboring countries without relying on heated marine bitumen tankers for the entire journey. That makes land corridors through Turkey, Syria and potentially Jordan increasingly important if Gulf shipping remains restricted. But road transportation has its own capacity and cost limitations and cannot easily replicate the scale of normal maritime trade.
The Syrian fuel-oil experience demonstrates the problem. Moving hundreds of thousands of tons overland requires large tanker fleets, border capacity and continuous terminal operations. Earlier operations produced truck lines extending for dozens of kilometers on some sections of the route.
For Iraqi bitumen exporters, this suggests that diversification is possible, but it will not be cheap.
The crisis is effectively separating Iraq’s export system into three different models: highly expensive maritime exports through Hormuz, limited but expanding pipeline exports toward the Mediterranean, and overland truck-based exports of heavy products through neighboring countries. Each has different costs, capacities and technical restrictions.
That restructuring could ultimately alter the regional bitumen map. Turkey and Syria may become more important transit points. Mediterranean ports could gain importance for Iraqi heavy products destined for Europe and North Africa. Land routes may become more valuable for packaged bitumen. At the same time, Gulf terminals could offer lower FOB values if sellers struggle to secure vessels.
But alternative routes remain far smaller than the export system Iraq had before the conflict. The country historically relied overwhelmingly on southern terminals because they could handle very large volumes efficiently. Replacing roughly 3.5 million barrels per day of prewar crude exports with pipelines and trucks requires years of infrastructure investment, not simply a change in commercial preference.
The 75% decline announced on August 8 therefore carries a broader message for the bitumen industry. Hormuz is no longer only a maritime risk that increases insurance premiums. It is actively changing Iraq’s infrastructure priorities, crude pricing, tanker economics and geographical direction of trade.
For bitumen, the immediate evidence points more strongly to logistics and freight pressure than to a confirmed production shortage. Marine access remains difficult, alternative corridors cost more, and specialized vessels have fewer reasons to enter a high-risk Gulf market unless freight compensates them adequately.
If Iraq’s crude production remains suppressed long enough to reduce refinery throughput, the risk could eventually move from transportation into physical bitumen supply. That point has not yet been demonstrated by public production data.
For now, the most important change is already visible: Baghdad is paying, discounting and rebuilding its way out of dependence on one maritime exit. Hormuz has turned alternative routes through Ceyhan, Baniyas and potentially Aqaba from secondary projects into strategic necessities. The Iraqi bitumen market will increasingly be shaped by the same shift.
By WPB
News, Bitumen, Iraq, Strait of Hormuz, Basrah, Ceyhan, Baniyas, Aqaba, Oil Exports, Asphalt Market
