Turkey Turns Geography into Leverage: The Pipeline That Bypasses Hormuz

Against the backdrop of the blockage of the Strait of Hormuz due to the Iran–US conflict, Turkey and Iraq have agreed to expand the pipeline network, which allows Baghdad to diversify its oil exports and Ankara to strengthen its position as an indispensable energy hub in the region.

A One-Year Deal with Strategic Implications

On August 1, 2026, Turkey and Iraq signed a one-year agreement covering the transit of Iraqi crude through the Kirkuk–Ceyhan pipeline. The deal, struck between Turkish state firm BOTAŞ and Iraq’s SOMO and NOC, provides for transit capacity of up to 750,000 barrels per day for Iraqi crude. Energy Minister Alparslan Bayraktar estimated the arrangement could generate approximately $500 million a year in transit revenue for Turkey.

The contrast is telling. The pipeline system has a nominal capacity of 1.5 million barrels per day, yet actual flows were only around 170,000 barrels per day in recent months. Disputes over Iraqi and Kurdish oil exports, compounded by a long-running legal battle between Baghdad and Ankara, have kept the system well below its nominal capacity for years. Flows resumed in September 2025 after a two-and-a-half-year halt, but the pipeline remains heavily underutilized.

The longer-term ambition is to extend the route southward to Basra, where much of Iraq’s oil is produced, and raise its capacity to 2.5 million barrels per day. Crude from other regional producers, including Kuwait, could eventually be carried through the same route. Bayraktar has made no secret of the ambition: Ceyhan, he argued, is not simply a terminal but a gateway – and potentially a Mediterranean trading hub for oil and petroleum products. He has gone further, describing the ambition as turning Ceyhan into something closer to a Mediterranean Rotterdam – a place where oil and petroleum products are stored, traded and priced, rather than merely loaded onto ships.

What Iraq Gains, What Turkey Gains

For Baghdad, the attraction is straightforward.........

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