Iraq revives decades-old oil route through Syria as Iran war disrupts Strait of Hormuz

Qatari firm UCC Holding is transporting up to 150,000 barrels of Iraqi crude daily by truck to Syria's Baniyas port for export to Mediterranean markets.

Iraq has reportedly revived a largely dormant overland route through Syria to export its crude oil as the Iran war disrupts shipments through the Strait of Hormuz, its traditional export corridor.

Reuters reported that hundreds of tanker trucks are now queuing outside a depot near Basra to transport Iraqi oil across the desert to the Syrian port of Baniyas.

The alternative route, despite involving higher transportation costs, has regained importance amid disruptions to Gulf exports and the end of years of conflict in Syria, two people familiar with the matter told Reuters.

Iraq, the second-largest oil producer in OPEC, exports most of its crude through terminals in the Gulf. However, the Syrian corridor has emerged as a strategically important alternative, particularly for shipments of heavy crude.

Qatari energy company UCC Holding began transporting Iraqi crude by road to Baniyas last month under an agreement with state oil marketer SOMO, according to Bassem Abdul Karim, director general of the state-run Basra Oil Company (BOC).

Under the arrangement, UCC is shipping between 120,000 and 150,000 barrels per day (bpd), with the actual volumes depending on the availability of tanker trucks, Abdul Karim said. The crude is transported from Iraq's southern oilfields to Baniyas, where it is loaded onto vessels for international export.

UCC already operates a fleet of 6,000 trucks and is expanding it to 10,000 to support the operation. The company also has around 10,000 drivers, a person familiar with the deal said, adding that approximately 150,000 barrels are unloaded daily.

"We load crude oil at the Tuba storage facility and transport it to Baniyas, Syria. The round trip, including the return journey to Tuba, takes up to five days," said Ishaq Mohammed, a tanker truck driver involved in the operation.

Since the agreement took effect on October 26, UCC has transported approximately 1.6 million barrels, said Luay Jawad, manager of the Tuba storage facility near Basra.

A document reviewed by Reuters showed that UCC plans to load between 5 million and 14 million barrels of heavy crude over three months, starting October 14, at a discount of $38 per barrel.

However, shipments are unlikely to exceed the planned levels in the immediate future because of limitations in truck availability and other logistical bottlenecks, the person familiar with the arrangement said.

Once the crude reaches Baniyas, it is loaded onto ships for delivery to refineries across the Mediterranean, including those in Greece, Italy and Turkey.

Under the agreement, UCC is entitled to approximately $12 per barrel to cover trucking and other transportation expenses incurred while moving the oil through Syria.

Iraq produced nearly 4.5 million barrels of oil per day in October, around 500,000 bpd higher than its output in the previous month, according to secondary sources cited by OPEC in its latest monthly report.