Key Points
- Iraqi crude is moving overland by tanker truck to Syria's Baniyas port for export to Mediterranean buyers.
- Baghdad has sought alternative routes since the Iran war disrupted the Strait of Hormuz.
- The revived desert corridor gives Iraq a small but strategically useful outlet beyond the Gulf.
The latest:
Hundreds of tanker trucks are queuing outside a depot near Basra to load Iraqi crude bound for Syria’s Mediterranean port of Baniyas, reviving a desert route largely unused for decades. Reuters reported that Qatar’s UCC Holding began the shipments last month under a contract with state marketer SOMO. The volumes are modest against Iraq’s Gulf exports, but the corridor has become a strategic alternative for heavy crude.
Details:
- The volumes: UCC began shipping 120,000 to 150,000 barrels per day under its SOMO contract, with cargo sizes depending on truck availability, said Bassem Abdul Karim, director general of the state-run Basra Oil Company. He said the crude moves from Iraq’s southern oilfields to Baniyas for sale into international markets.
- The contract: A document reviewed by Reuters showed 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 dollars per barrel. The company is entitled to about 12 dollars per barrel to cover transport costs through Syria.
- Loaded so far: Since the deal took effect on October 26, UCC has loaded about 1.6 million barrels, said Luay Jawad, manager of the Tuba storage facility near Basra. A person familiar with the deal put daily unloading at around 150,000 barrels.
- The fleet: UCC already runs 6,000 trucks and is expanding to 10,000 for the route, with roughly 10,000 drivers currently employed, according to a person familiar with the arrangement. Truck supply remains the binding constraint on how much crude the corridor can absorb.
- The journey: Drivers load at the Tuba storage facility and drive west across the desert to the Syrian coast. “The round trip, including the return journey to Tuba, takes up to five days,” said Ishaq Mohammed, one of the tanker drivers.
- The buyers: The crude is loaded onto ships at Baniyas for delivery to Mediterranean refineries in Greece, Italy and Turkey, among others, a person familiar with the matter said. Neither UCC nor SOMO responded to Reuters requests for comment.
- The ceiling: Volumes are unlikely to rise much above current levels in the near future because of bottlenecks in truck supply and other constraints, the same person said. No expansion timetable for the route has been announced.
- The output backdrop: Iraq produced nearly 4.5 million barrels per day in October, about half a million more than the previous month, according to secondary sources cited by OPEC in its latest monthly report. Iraq is the group’s second-largest producer and still ships most of its crude from Gulf terminals.
Background:
The Strait of Hormuz is Iraq’s usual export outlet and was disrupted during the Iran war, pushing Baghdad to search for alternative corridors. The overland route to Syria had been largely idle for decades.
Between the lines:
Two people close to the matter told Reuters the route regained appeal partly because years of conflict in Syria have ended, despite higher transport costs. The economics underline that: a 38 dollar discount plus 12 dollars in trucking fees is a steep price for heavy crude, suggesting Baghdad is buying optionality rather than margin while Hormuz risk persists.
What’s next
Watch whether UCC reaches the upper end of its 14 million barrel target by mid-January, whether the fleet expansion to 10,000 trucks lifts daily loadings above 150,000 barrels, and OPEC’s next monthly output report for Iraq.
