Iraq resumes overland oil exports via Syria

Iraq has restarted overland oil exports through Syria to the Mediterranean as war risk and insurance costs reshape energy logistics around the Strait of Hormuz.

According to Middle East Eye, Iraq’s state oil marketer SOMO has agreed to move about 50,000 barrels per day of Basra medium crude via the al-Tanf crossing into Syria, with the oil stored by Syria’s state petroleum company and then shipped from the port of Baniyas to Europe. Reuters, cited in the same report, also describes a separate arrangement for roughly 650,000 metric tonnes of fuel oil per month over April–June to be transported overland through Syria.

The volumes are small compared with Iraq’s main export system, but the route is a signal about where the real bottleneck has moved. Physical supply is only one constraint; the more immediate rationing mechanism is often financial. When tankers face war-risk premia, higher charter rates, and tighter letters-of-credit terms, cargoes can become “available” only to buyers with stronger balance sheets, better banking access, and insurance that still clears compliance checks. In practice, that pushes trade away from global, fungible seaborne flows and toward regional workarounds—shorter voyages, alternative corridors, and deals that can be settled and insured.

This is where the LNG market has started to resemble a backdoor extension of the Hormuz conflict. LNG is nominally global, but in a tight market cargoes are pulled toward the highest netback after shipping and financing. Europe’s demand for replacement molecules—whether to offset disrupted Middle East flows or to hedge against further escalation—does not just raise European prices; it displaces marginal buyers elsewhere. Countries such as Pakistan, which can swing from surplus to shortage depending on spot availability, are exposed to the second-order effect: cargoes do not need to stop sailing for shortages to appear. They only need to be repriced beyond what local utilities can finance.

The Iraqi-Syrian land route illustrates the same logic in reverse. Moving crude by truck across borders is more expensive than exporting through established terminals, but it can be cheaper than being priced out of maritime insurance and credit. It also creates new tollbooths: every border crossing, storage node, and port operator becomes a point where fees, delays, and political leverage accumulate.

Syria’s petroleum company said the first convoy included 299 tankers. The oil ends up in Europe, but the detour starts on a road.