Iraq Plans to Triple Ceyhan Pipeline Exports as Goldman Warns Hormuz May Not Fully Recover
Goldman Sachs sees Hormuz flows settling at 70% of pre-war levels, leaving Iraq's Ceyhan gamble as one of few available options.
Iraq is planning to triple its crude exports through the Kurdistan pipeline to the Turkish Mediterranean port of Ceyhan within three months, according to OilPrice.com, as the country scrambles to compensate for lost Hormuz volumes. The move places Iraq among the most exposed producers to the strait's closure — OPEC's second-largest producer now betting heavily on a landlocked route that bypasses its primary export corridor.3
The scale of what has been lost makes the urgency plain. ADNOC CEO Sultan Ahmed Al Jaber said on Wednesday (2026-05-21) that more than one billion barrels of oil have been lost since the closure began, with roughly 100 million additional barrels lost every week the strait stays shut. Al Jaber added that even if conflict ended immediately, it would take at least four months to ramp flows back to 80% of normal levels.1
Before the disruption, the Strait of Hormuz carried nearly 20% of global oil supply — about 18.2 million barrels per day of crude and refined products in 2025, accounting for roughly one-quarter of worldwide seaborne oil trade and one-fifth of global LNG trade, according to OGJ data. Asian economies account for nearly 80% of Hormuz oil flows and remain the most exposed; Platts JKM LNG front-month settled at $21.45/MMBtu at Friday's (2026-08-01) close.5
Goldman Sachs analysts, cited by Bloomberg, have warned that tanker traffic through the chokepoint may never fully recover to pre-war levels, with flows potentially settling at just 70% of pre-war volumes — roughly 13 million barrels per day. The bank estimated that 70% threshold could be reached by end of July, with visible flows standing at only 1.3 million barrels per day through the strait itself, plus another 1.6 million barrels per day moving through the Gulf of Oman on vessels with transponders switched off.6
The US-Iran preliminary peace deal signed on Wednesday (2026-06-17) — under which Iran agreed to reopen Hormuz in exchange for Washington lifting all sanctions, including UN measures — was supposed to change that arithmetic. But Goldman's post-deal analysis suggests the market is discounting a full return to pre-war flows. ICE Brent crude front-month settled at $91.04/bbl at Friday's (2026-08-01) close, well above pre-conflict levels, reflecting continued supply uncertainty despite the ceasefire framework.6
Iraq's Ceyhan push is not the only pipeline rerouting underway. The UAE announced on Friday (2026-05-15) that it would accelerate construction of a second pipeline to double export capacity through Fujairah by 2027, with the Abu Dhabi Crown Prince backing the project directly, according to Zawya. By late May, ADNOC's existing Abu Dhabi Crude Oil Pipeline — the Habshan-Fujairah route — was running near its 1.8 million barrel per day capacity limit, and ADNOC confirmed on Wednesday (2026-05-21) that the new line was roughly 50% complete.2,1
The Straits Times reported in May that all Arab Gulf states were reassessing their security arrangements following the Iran conflict, with pipeline bypass capacity the central focus. The Habshan-Fujairah pipeline's ceiling at 1.8 million barrels per day illustrates the bottleneck: the UAE alone exported far more than that through Hormuz in normal times, meaning the existing bypass handles only a fraction of pre-war flows.7,1
Alternative flows along overland and non-Hormuz sea routes were averaging about 7.5 million barrels per day as of mid-June, according to Bloomberg data cited by Goldman — a meaningful recovery from the acute disruption phase, but still far short of the 18.2 million barrels per day that moved through the strait in 2025. That gap explains why ICE Brent crude front-month remains elevated even after the preliminary peace deal.6,5
Goldman's assessment that Hormuz flows may settle permanently below pre-war levels carries significant implications for routing economics. Producers who secured pipeline capacity early — the UAE through Fujairah, Saudi Arabia through its East-West pipeline to Yanbu — hold a durable freight advantage over those moving now. Iraq, heavily dependent on Hormuz and with the Ceyhan route as its main alternative, has fewer options. Baghdad's three-month timeline for tripling Ceyhan throughput remains unverified against the Kurdish region's uneven export history and the pipeline's current condition.6,3,4