Shafaq News- Basra
Oil exports from Basra, Iraq's main southern port on the Persian Gulf, have risen to their highest level since the conflict between the United States and Iran began in February, according to an analysis by the Foundation for Defense of Democracies (FDD), a Washington-based think tank.
Citing satellite imagery reported by Bloomberg, the analysis said seven tankers with a combined capacity of about 13 million barrels were at Basra on August 24, compared with one or two tankers visible at their berths in previous weeks. It cited the increase as a further sign that Iraq is regaining confidence in moving crude through the Gulf.
Beginning in September, Iraq's State Oil Marketing Organization (SOMO), which manages the country's crude sales, will offer oil for pickup outside the Strait of Hormuz, the narrow waterway at the mouth of the Persian Gulf through which much of the world's seaborne oil passes, according to Bloomberg.
Earlier in August, the Abu Dhabi National Oil Company (ADNOC) offered to shuttle Iraqi oil through the Omani side of the strait, the analysis said.
Iraqi President Nizar Amedi said on August 22 that Tehran had facilitated the passage of some Iraqi vessels through the strait, indicating possible use of the Iranian side, according to Reuters. FDD argued that recovering Basra exports could benefit Iran if shipments are not closely monitored, either through Iranian oil smuggling or possible tolls imposed on Iraqi shipments.
Iraq's Reliance on Southern Exports
Roughly 90 percent of Iraq's energy production comes from its southern fields, according to the US Energy Information Administration, and most of that crude must be exported through Basra because Iraq lacks sufficient pipeline capacity to move it north.
Before the recent conflict, Basra handled 94 percent of Iraq's oil exports, which generate more than 90 percent of the national budget, with roughly 3.3 million barrels per day (bpd) exported through the port.
Exports have recovered only partially. As of August 26, Basra was loading an average of 1.9 million bpd, according to TankerTrackers.com data cited by FDD. That is up sharply from about 100,000 bpd in May but remains well below pre-conflict levels.
The collapse in exports has already contributed to a financial crisis in Baghdad, the analysis said.
Smuggling Allegations
FDD said Basra's southern export infrastructure has also been used in Iranian oil-smuggling schemes, citing US Treasury designations.
It described a method in which Iranian and Iraqi crude are blended and then sold as Iraqi oil, obscuring the cargo's origin, evading US sanctions on Iran and allowing Iranian oil to be sold at market prices.
FDD said that in some cases Iraqi oil has been provided at subsidized prices through government allocations to Iran-aligned actors, which the report said generate more than $1 billion a year in profits.
The US Treasury has also sanctioned Iraqi Deputy Oil Minister Ali Maarij Al-Bahadly, accusing him of facilitating access to Iraqi oil and falsifying documentation for a major Iranian oil-smuggling network.
FDD's Recommendations
FDD called on Washington to monitor vessels loading at Basra and coordinate with Iraqi officials to verify that cargoes are entirely Iraqi.
It recommended that any vessel raising concerns for US Central Command (CENTCOM), the US military command responsible for the Middle East, or US intelligence agencies be prevented from proceeding until its cargo is verified.
The analysis also urged the US administration to seek clarity on the terms under which Iran has permitted Iraqi exports through the Strait of Hormuz.
FDD argued that any payment to Tehran would violate US sanctions and run counter to Operation Economic Outcast, a US campaign aimed at financially isolating Iran.