Iran Permits

(SeaPRwire) –   Iran’s military has announced that Iraq, a major oil-producing nation, will be exempt from shipping restrictions in the Strait of Hormuz, a development that could significantly impact global crude oil supplies.

“Brotherly Iraq is exempt from any restrictions we have imposed on the Strait of Hormuz,” stated Iran’s military spokesman in an Arabic-language video released by the state-run Islamic Republic News Agency.

This declaration has the potential to facilitate the movement of up to 3 million barrels of Iraqi oil per day. However, an Iraqi official noted that the practical benefit of this exemption hinges on shipping companies’ willingness to navigate the strait to collect cargoes, given the associated risks.

It remains unclear whether this exemption will cover all Iraqi oil or solely the nation’s tankers, and the specifics of its enforcement are not yet defined.

Read More: Secret Codes, Yuan Fees Get Ships Through Iran’s Hormuz Tolls

Despite ongoing conflict and heightened threats from the US, vessel traffic through the crucial strait has seen a slight increase, with several Asian nations securing safe passage. A French container ship recently transited the strait, marking a first for a Western European vessel, and a Japanese-owned LNG tanker also successfully passed through.

Nevertheless, the current number of transits represents a small fraction of the pre-war levels, when one-fifth of the world’s oil and liquefied natural gas passed through the strait.

Read More: Here’s a List of Gulf Energy Infrastructure Damaged in Iran War

In the initial weeks of the five-week-old war, Iraq and other key Persian Gulf oil producers were compelled to reduce crude output as their primary export route was blocked and storage facilities reached capacity.

Iraqi oil exports saw a substantial decline, plummeting by approximately 97% to a daily average of 99,000 barrels in March compared to the previous month. This reduction was attributed to decreased production and the restriction of overseas shipments to a pipeline system that extends through Turkey to the Mediterranean port of Ceyhan.

Iran’s relaxation of Hormuz restrictions presents an opportunity for Iraq to potentially resume some seaborne shipments, although other challenges persist, including uncertainty regarding the timeline and extent to which the nation’s oil fields can increase production.

Regional Brothers

Furthermore, given the weeks of shipping disruptions, it is uncertain how much tanker capacity will be readily available to load and transport Iraqi crude from Persian Gulf ports.

Iraq holds the position of the second-largest oil producer within OPEC, trailing only Saudi Arabia.

The Iranian statement differentiated the “brotherly” Iraq from “hostile” nations to which Tehran has previously declared the strait to be closed. Speaking in Arabic, rather than Iran’s native Persian, the military spokesman expressed gratitude to the Iraqi people for their support since the conflict began.

The two neighboring countries share strong ties, despite a protracted eight-year war in the 1980s, partly due to their predominantly Shia Muslim populations. Iraqi militias play a significant role in Iran’s network of regional proxies that oppose the US and Israel, and Baghdad also depends on Tehran for natural gas supplies.