Country Brief: Iraq

Energy Profile

Key Infrastructure

• Basra Oil Terminal (ABOT): Up to 3M bbl/day capacity (upgraded early 2025); 4 supertanker berths; handles ~85% of southern exports, fully exposed behind Hormuz
• Khor al-Amaya Oil Terminal (KAAOT): ~240K bbl/day current capacity (2 berths, partially rehabilitated; expansion to 600K+ planned); secondary Gulf terminal
• Sealine 3 pipeline: 70 km pipeline (61 km offshore) under construction; 2.4M bbl/day design capacity; completion targeted late 2027; construction status uncertain due to conflict; offshore work likely paused given Gulf shipping halt and security risk to construction vessels
• Iraq-Turkey Pipeline (ITP): Kirkuk to Ceyhan (Turkey); ~250K bbl/day moving as of late July, Iraq's only non-Hormuz export route. The 1973 pipeline agreement formally expired on schedule Jul 27, 2026, but Baghdad and Ankara signed a 12-month transitional protocol keeping current flows in place while a permanent replacement is negotiated (Turkish Energy Minister Alparslan Bayraktar confirmed continuity). Talks have widened past a simple pipeline renewal: Turkish state firm TPAO is taking a 15% stake in the BP-operated Kirkuk oilfield under a share-transfer deal announced during PM al-Zaidi's Jul 28 Ankara visit, and Baghdad has floated scaling deliveries toward 1M bbl/day over time, though actual throughput remains ~250K bbl/day for now
• Kirkuk-Baniyas pipeline revival: US, Iraq, and Syria are reviving the 500-mile Kirkuk-to-Baniyas line as a second Hormuz-bypass route to Syria's Mediterranean coast, unveiled around PM al-Zaidi's mid-July White House visit; reconstruction estimated $4.5-8B on a 2-3 year timeline, with Chevron, Capital TI, and a Qatari firm named for preliminary work. Long-lead infrastructure, not a current-crisis fix
• Al Faw Grand Port: Under construction; future oil/commercial terminal near Basra
• Southern refineries: Basra (210K bbl/day), Nasiriyah, Dhi Qar

Key Actors

• South Oil Company (SOC): operates southern fields and Basra terminals
• State Organization for Marketing of Oil (SOMO): crude oil marketing and export
• Kurdish Regional Government (KRG): controls northern fields (~285K bbl/day)
• Popular Mobilization Forces (PMF/Hashd al-Shaabi): Iran-aligned militia umbrella; 100K+ fighters; a state-salaried force with its own parliamentary bloc propping up the governing coalition, not an outside insurgency
• Kataib Hezbollah: most powerful Iran-aligned PMF faction; designated terrorist organization by US
• PM Ali al-Zaidi: a businessman with no prior political experience, sworn in May 14, 2026 as the Coordination Framework's consensus pick after a five-month deadlock, succeeding Mohammed Shia al-Sudani with the same Shia-coalition backing intact. Active on two fronts at once heading into Day 152: he carried a Trump-originated ceasefire offer to Tehran in late July, which Iran rejected, and traveled to Ankara Jul 28 to close the Ceyhan bridge deal and a wider energy framework with Erdogan. Balancing federal control, KRG relations, and militia pressure is now complicated by a live PMF casualty count

Crisis Exposure (Day 152: Blockade Holds, War Widens Into Iraq)

• Southern Gulf exports remain near zero, and the second war phase has entrenched rather than eased that. Iraqi crude through the Strait of Hormuz collapsed toward zero back in May; when direct US-Iran strikes resumed Jul 7-8 and the naval blockade was reimposed around Jul 14, whatever residual flow existed largely disappeared with it. Tracked transits fell to a single tanker on Jul 23 (the lowest daily count since May 7), with zero strait entries that day. The bottleneck is the strait, not the reservoir.
• Hormuz is no longer "open on paper." Iran suspended its own ceasefire commitments in mid-July and the strait is now formally treated as closed and blockaded, with no reopening signal. Mines laid by Iran remain uncleared, ~80 mines on a months-long clearance timeline. P&I/war-risk cover stays unrestored, with hull war-risk premiums running 3-10% of vessel value. US naval enforcement of the blockade has redirected 12 vessels, disabled 2, and boarded 2 as of late July.
• General License X1 expired Jul 17 with no extension, closing the last authorized channel for Iranian oil trade tied to the collapsed spring MoU. Full sanctions reversion is now the default, and it removes any near-term legal path back to a negotiated reopening.
• Only working bypass: Kirkuk-Ceyhan, still ~250K bbl/day. The 1973 agreement's Jul 27 expiry did not become the feared cliff: a 12-month bridge protocol keeps the pipeline running while Baghdad and Ankara negotiate a bigger deal, detailed under KRG-Federal Tensions below. See The Bypass Map for how thin that trickle is against Iraq's total export loss.
• Storage remains the binding constraint. With ~35.5M barrels of storage against ~4.2M bbl/day capacity, tanks saturate in ~25-30 days and force full field shutdowns. Iraq holds no tanker fleet of its own and no meaningful export buffer.
• Restart lag has only lengthened. Southern fields have now sat through the better part of five months of stop-start shut-ins since Feb 28, and scenario modeling puts the odds of meaningful capacity recovery within three months of any ceasefire at ~7-8%, driven as much by crew and certification constraints as by reservoir damage or tank saturation.
• Fiscal damage compounding: close to five months of near-zero southern exports on a ~90% oil-dependent budget. Emergency borrowing and reserve drawdown are no longer a contingency; they are the baseline.
• Diplomatic overlay has moved past the unsigned spring MoU entirely. That deal is dead in practice; this desk holds deal-collapse odds at 85-90%, tilting toward the top of that band as of Jul 29. Two live tracks remain: an Oman-Iran joint working group on strait administration mechanics (voluntary fees versus mandatory tolls, unreconciled), and a Qatar/Egypt/Pakistan bridging proposal on Hormuz-control language that Tehran and Muscat reportedly gave an informal green light, now awaiting Trump's decision. Neither has produced a signed instrument.
• Iraq's airspace has stayed open since Apr 8, after a 40-day closure; commercial aviation continues to operate despite the new strikes.
• OPEC+'s quota of 4.273M bbl/day stays meaningless while exports cannot reach market through a closed strait.
• Kuwait remains a parallel casualty: struck repeatedly through the summer, though KPC has confirmed real infrastructure damage without a matching loss of new export barrels, since the blockade had already flattened Kuwait's baseline before the strikes landed.

Militia Dynamics

• PMF/Islamic Resistance held its ceasefire discipline through a war that reignited around it. The suspension announced with the April truce broadly survived the second war phase: when direct US-Iran strikes resumed Jul 7-8 and ran 13 consecutive nights before pausing Jul 24-25, PMF factions stayed off the target list and largely out of the fight, a contrast with the Feb 28-early May phase that killed 100-plus PMF fighters, including the Mosul/Tuz Khurmatu strikes (3 killed, Mar 29) and the Habbaniyah base attack in Anbar (7 killed, 13 wounded, Apr 2).
• New front, Jul 28-29: US and Saudi jets strike PMF sites in eastern Iraq. Overnight, after Iran fired ballistic missiles at a US base reportedly located in Jordan, US and Saudi Arabia fighter aircraft struck PMF logistics and weapons depots across eastern Iraq. CENTCOM ties the strikes to a rolling 72-hour campaign of 30-plus IRGC-directed drone attacks against US forces and Saudi Aramco infrastructure, not to the missile launch alone. PMF claims ~20 killed and 32 wounded, a preliminary figure CENTCOM has not confirmed (an earlier wire pickup put the toll near 10). The strikes mark the first coalition action inside Iraq this crisis window; every prior direct-strike exchange this phase of the war had stayed confined to Iranian soil itself.
• Baghdad's response was still pending as of this writing. Al-Zaidi's predecessor Sudani had condemned earlier strikes on the PMF as "systematic and repeated aggression" while pushing factions to disarm and convert to political activity; al-Zaidi inherits the same balancing act, now with a live casualty count and a parliamentary bloc that answers to Tehran as much as to Baghdad.
• Defense Analyst's read: a target set of logistics and weapons depots rather than leadership or command nodes points to capability degradation and punitive signaling, not an attempt to break the PMF network outright. Watch for retaliation against US or Saudi positions in Iraq inside 48 to 72 hours, the clearest test of whether the proxy war stays contained rather than merging with the wider Iran-US and Saudi-Houthi fronts, the same containment question mapped for Saudi Arabia in The Abqaiq Reversal. That window stretched to a full week; the entry below answers it for now, containment held, though a postponed threat is not a closed one.
• The one-week retaliation deadline expired Aug 7, then was defused rather than detonated. Iraq's PM Ali al-Zaidi placed forces on nationwide high alert as the deadline lapsed, and hours later the "Islamic Resistance in Iraq" militia umbrella announced it is postponing its threatened retaliation against US and Saudi forces, at the direct request of Badr Organization leader Hadi al-Amiri. Postponed is not cancelled: the underlying grievance, the unresolved Jul 28-29 casualty count, has not been addressed, and Badr's intervention shows restraint is available inside the militia network when a senior figure invokes it, not that the threat is gone. This is also the northern half of a separately-flagged two-front coordinated attack warning (Saudi, US, and regional intelligence, Aug 6) aimed at Gulf energy infrastructure, ports, and airports; the southern, Houthi half continues on a separate track, covered in the Yemen/Houthis brief. See The Synchronization Question for the full scenario tree on whether the two fronts actually synchronize.
• New target set, Aug 17: Iranian drones hit KRG leadership near Erbil. At ~00:28 local, two Iranian Hadid-110 UAVs launched from the Iranian border struck the private office of KRG PM Masrour Barzani and the residence of the chief of the Parastin, the KRG's security agency, in the Pirmam district northeast of Erbil. No casualties or damage were reported and no one has claimed responsibility; Barzani called it a "dangerous escalation," and multi-country condemnations followed Aug 18. This is the first attributed Iranian strike on KRG leadership in the record: prior Erbil-area strikes in 2020, 2022, and 2024 targeted US-linked or claimed Israeli sites, never the KRG leadership itself. Timing places it inside Iran's post-MoU escalation window: the Islamabad MoU expired Aug 16-17, Iran fired ballistic missiles toward UAE territory Aug 18, and a senior Iranian official says Tehran will "shift to offense," which reads as Tehran widening its target ledger rather than a Kurdish-specific quarrel. Meanwhile the Iraqi-militia half of the earlier coordinated-attack warning remains postponed at Badr's request, not cancelled, and disarmament friction continues (Kataib Hezbollah's rejection, the Sept 30 deadline). Watch: Erbil follow-on strikes, the KRG and Baghdad response, and militia posture.
• US-Israeli strikes on Iraqi soil recurred earlier in the ceasefire era too. Reports in May of a covert Israeli desert outpost in western Iraq prompted PMF sweeps of the Najaf and Karbala deserts (announced May 12); Israeli aircraft reportedly struck Iraqi army units near the site.
• Six Gulf nations joint condemnation (Mar 26): Saudi Arabia, UAE, Bahrain, Kuwait, Qatar, Jordan condemned Iranian attacks and those by "armed factions loyal to Iran" from Iraq. Cited UNSC Resolution 2817 and Article 51 self-defense.
• PMF factions retain direct IRGC communication channels, and IRGC command losses earlier in the war may have loosened central coordination discipline among factions. CENTCOM's new standing justification for hitting Iraq-based targets could test that discipline directly in the weeks ahead.
• Key risk: CENTCOM's stated rationale, a rolling drone campaign rather than one Iranian action, gives Washington a durable basis to strike Iraq-based targets again without fresh authorization, raising the odds of a repeat strike even absent a new Iranian provocation.

KRG-Federal Tensions

• Northern pipeline resumed Sep 2025 after a 2.5-year halt under a federal-KRG agreement; ~250K bbl/day has been moving, though flows stay intermittent on regional security.
• KRG delivers crude to SOMO for export via Turkey, retaining a portion for local consumption; international oil companies receive ~$14/bbl after transport deductions.
• The Jul 27 cliff was bridged, not resolved. Turkey's 1973 Iraq-Turkey Crude Oil Pipeline Agreement expired on schedule, but a 12-month transitional protocol, finalized around PM al-Zaidi's Jul 28 Ankara visit, keeps ~250K bbl/day flowing while a permanent framework is negotiated. That framework has grown broader than oil transit alone: TPAO's 15% stake in the BP-run Kirkuk oilfield and Iraqi interest in scaling deliveries toward 1M bbl/day are both on the table, alongside a longer-dated concept linking Basra and Haditha to both Ceyhan and Syria's Baniyas.
• The worst-case outcome flagged in this crisis, Iraq losing its only working bypass outright while Hormuz stays shut, did not materialize on Jul 27. But current throughput is still capped near ~250K bbl/day, a fraction of the pipeline's 1.6M bbl/day nameplate, and the permanent deal behind the bridge protocol remains unsigned.

Structural Vulnerabilities

• Near-total dependence on southern Gulf terminals for export revenue: close to five months of near-zero southern flows have drained fiscal reserves.
• No domestic pipeline bypass to the Mediterranean or Red Sea beyond the fragile Ceyhan trickle. A proposed ~2.25M bbl/day Basra-Haditha line and the newly revived Kirkuk-Baniyas concept would cut Hormuz dependence, but both are years and large capital away, not crisis tools.
• Northern route (Ceyhan) capped near ~250K bbl/day and still politically fragile even after the bridge deal: KRG-Baghdad revenue-sharing and Turkish transit terms both remain unsettled inside the 12-month window.
• Government budget ~90% oil-dependent; close to five months of near-zero exports force emergency borrowing and reserve drawdown.
• Restart lag: extended stop-start shut-ins since Feb 28 compound restart difficulty; independent modeling puts meaningful capacity recovery within three months of any ceasefire at only ~7-8%, even before accounting for reservoir damage and tank saturation specific to Iraq.
• Storage saturation: ~35.5M barrels of storage against ~4.2M bbl/day capacity means tanks fill in ~25-30 days, forcing full field shutdowns. No domestic tanker fleet to evacuate barrels.
• Iran-aligned militias: 100-plus PMF killed during the initial war phase, plus PMF's preliminary, unconfirmed claim of ~20 killed and 32 wounded from the Jul 28-29 coalition strikes. A ceasefire discipline that held through most of the second war phase has now been tested directly for the first time.
• Infrastructure concentrated and exposed: ABOT/KAAOT idle; uncleared mines in Hormuz and unrestored insurance keep vessel access closed regardless of any future paper "reopening."
• Medium-term capacity expansion (6M bbl/day target by 2028-2029) is at greater risk than it was in June, given the added months of conflict damage and extended shutdowns.

TankerBrief Coverage Angle

Commodity traders, OPEC watchers, Gulf shipping operators, defense and intelligence analysts. On Day 152 they need: whether PMF retaliates against US or Saudi positions inside the 48-to-72-hour window Defense Analyst is watching, and whether that stays a one-off or becomes a standing CENTCOM justification for repeat strikes; the Ceyhan bridge deal's actual implementation and whether the broader Turkey-Iraq energy framework (TPAO's Kirkuk stake, the 1M bbl/day scale-up talk) advances or stalls; Iraq's fiscal trajectory under close to five months of lost southern revenue (emergency borrowing, IMF/World Bank engagement); the Oman-Iran working group and the Qatar/Egypt/Pakistan bridging proposal against this desk's 85-90% deal-collapse odds; OPEC+ quota versus deliverable output through a closed strait; and progress on long-dated bypass options (Kirkuk-Baniyas, Basra-Haditha, Sealine 3).