US oil firms sign deals with Iraq to develop alternative shipping routes

July 17, 2026 - 17:53

U.S. energy companies have finalized a series of agreements with the Iraqi government valued at approximately $60 billion. The deals are designed to develop alternative shipping routes for Iraqi crude oil, reducing the country's reliance on the narrow Strait of Hormuz in the Persian Gulf.

The agreements involve major American firms partnering with Iraqi state-owned oil companies to build new pipeline infrastructure and export terminals. One key project aims to connect southern Iraqi oil fields to a Mediterranean port, likely in Turkey, bypassing the Gulf entirely. Another initiative focuses on expanding pipeline capacity to the Red Sea.

Iraq is the second-largest producer in OPEC, but its export capacity is heavily dependent on the Strait of Hormuz, a chokepoint that has seen periodic tensions and military standoffs. The new routes are meant to give Iraq more flexibility and security in its oil exports, while also opening up new supply lines for global markets.

The deals also include investments in natural gas capture and power generation, as Iraq seeks to reduce flaring and address chronic electricity shortages. For the U.S. companies, the contracts represent a significant foothold in one of the world's last major frontiers for low-cost oil production.

Iraqi officials said the projects could take several years to complete, but they mark a strategic shift in how the country manages its energy exports. The agreements were signed during a recent trade mission, with both sides emphasizing economic cooperation over geopolitical rivalries.