A dormant Iraq-Saudi pipeline is back on the table as Baghdad hunts for Hormuz alternatives

Iraq looks to the Red Sea for another bypass for its crude exports: Saudi Arabia has approved preliminary plans looking into a pipeline project connecting Iraqi crude to its oil terminals on the Red Sea, Iraqi news daily Shafaq reports, citing sources familiar with the matter. The project is still in early stages, and the two countries still need to form a bilateral technical committee to review the project.

The plan could revive a war-era bypass: Iraqi crude used to flow to Saudi Red Sea terminals in the late 80s after a purpose-built pipeline was constructed to avoid the Arabian Gulf during the Iran-Iraq war. The pipeline, which cost USD 2.3 bn then to build and featured a capacity of 1.6 mn bbl / d, was shut down after Iraq invaded Kuwait in 1990. Saudi expropriated it in the early 2000s, citing accruing Iraq debt and reparations for the Gulf war.

This is the fourth pipeline bypass project that Iraq has been exploring since the Iran war halted its crude exports, but its first looking for a Red Sea outlet. Baghdad is in talks with Turkey to expand a pipeline bound to Ceyhan port on the Mediterranean, and is exploring new pipelines connecting to Jordanian and Syrian Mediterranean ports.

REMEMBER- Iraq is one of the most exposed producers to Hormuz disruptions. With no outlet for its exports other than sailing through Hormuz, Iraq’s crude exports plummeted to as little as 200k bbl / d in May, before gradually recovering as conditions improved around Hormuz to 3.4 mn bbl / d by mid-October — roughly pre-war levels. Dependent on oil revenues for some 90% of the state budget, Iraq’s fiscal accounts have come under severe duress in 2026.