Bypassing Hormuz: Iraq emerges as key in new regional corridors

Shafaq News/ Iraq is taking center stage in a reshaped regional trade landscape, with major infrastructure projects and new energy partnerships positioning it as a critical transit hub amid growing efforts to bypass the Strait of Hormuz.

Turkish Energy Minister Alparslan Bayraktar said Ankara expects to “enter into an energy framework agreement with Iraq in the upcoming months,” which includes plans for an oil pipeline capable of transporting 1.5 million barrels per day from Basra to the Turkish port of Ceyhan. The deal also covers natural gas and electricity trade.

Iraq’s Ministry of Transport earlier announced that the first phase of the $17 billion Grand Faw Port project, located on the Persian Gulf, will be completed by the end of 2025. The port is a cornerstone in a corridor linking southern Iraq to the Turkish border and onward to the Port of Mersin. Talks are ongoing to revive the inactive pipeline between Iraq’s Kurdistan Region and Ceyhan.

Baghdad resumed electricity imports from Turkiye in September, and volumes are expected to double to 600 megawatts in 2025. The development came one week after the United States revoked Iraq’s waiver to purchase electricity from Iran. Once in effect, Turkiye will supply Iraq with twice the power Iran currently provides.

Elsewhere in the region, alternative trade routes are also advancing. Saudi Arabia has launched a tender for a railway connecting the Persian Gulf to the Red Sea, while Kuwait signed a contract with Turkish company Proyapi on April 7 to design a railway linking Kuwait to Oman via Gulf Arab states. The 2,177-kilometer Gulf Railway is expected to be completed by 2030 and aligns with Saudi efforts to create a Gulf–Red Sea rail corridor.

Turkiye, meanwhile, has reinforced its status as a regional energy hub. It operates the TANAP and TurkStream pipelines, which supply Azerbaijani and Russian gas to Europe. Turkiye has also started receiving Turkmen gas via a swap deal through Iran. Since 2017, the Baku–Tbilisi–Kars railway has enhanced east–west trade, with Georgia completing upgrades in late 2024 that expanded its capacity from 1 million to 5 million tons per year.

Iran, by contrast, has been increasingly isolated from emerging infrastructure networks. Its repeated threats to close the Strait of Hormuz have not materialized but have contributed to the region's shift toward bypass routes. Despite its location and ties with China, Iran remains largely excluded.

Tehran has attempted to reduce its dependency on the Strait by developing the Jask oil terminal and Chabahar port, but both remain underutilized. The Jask terminal briefly handled 170,000 barrels per day last October, and Chabahar accounts for less than 2% of Iran’s foreign trade. Iran’s total foreign transit stands at just 22 million tons—less than Azerbaijan’s 33 million tons moved last year.

Saudi Arabia and the UAE now export roughly half of their crude through domestic pipelines that avoid the Strait of Hormuz, including the Habshan–Fujairah route. China has prioritized northern routes through Central Asia and the Caucasus, where freight traffic via the China–Turkiye corridor has surged fivefold in recent years.

Despite longstanding agreements with Russia and India, Iran has failed to activate key transit corridors. The Zangezur Corridor, a shorter route through Armenia, is gaining momentum while Iran focuses on opposing its development. Meanwhile, Gulf states and Pakistan continue to advance infrastructure projects poised to redraw the region’s trade map.