On July 17, Iraq and Syria signed a provisional deal to lay a new pipeline connecting the Basra oil fields in southern Iraq to Syria’s port of Baniyas. The project, set to have a capacity of two million barrels per day, is slated for completion within 30 months of a full agreement.
The project could yield significant economic benefits for both parties. It would grant Iraq direct access to a Mediterranean port and provide an additional oil export route, reducing its near-total reliance on corridors through the Gulf and the Strait of Hormuz. Estimates also suggest the project could generate annual revenues of up to $200 million for the Syrian treasury.
The project extends beyond the economic realm—as reflected in its American backing. The July 17 Memorandum of Understanding was signed in Washington during a visit by the head of the new Iraqi government, Ali Al-Zaidi. This points to political and security dimensions linked to Washington’s desire to restructure Iraq’s energy sector and bolster the presence of powerful U.S. firms such as Chevron. The Trump administration also wants to reshape oil export routes in a way that curtails Iran’s ability to leverage the Iraqi economy and energy networks to expand its own influence within the country.
Shortly before the signing of the agreement, Al-Zaidi’s government oversaw the arrest of several Iraqi officers and politicians in connection with corruption cases involving the country’s oil wealth. There are some indications of links between a number of these figures and networks close to Iran, suggesting that the arrests came as part of a series of coordinated steps between Washington and Baghdad aimed at curbing the influence of such networks within state institutions and the economy, alongside efforts to consolidate a state monopoly on the possession of arms.
The U.S. also appears to be seeking to establish “alternative routes” to the Strait of Hormuz that would help stabilize global energy supplies and reduce their vulnerability to tensions in the region. This effort includes fostering economic integration among Syria, Iraq, and Türkiye, and linking it to broader security coordination, which could serve as a pillar of regional stability and support the recovery of both Syria and Iraq. This could limit the opportunities Iran might exploit to rebuild its influence in the two countries, both exhausted by years of war and prolonged instability.
Furthermore, one cannot overlook Washington’s desire to strengthen the presence of U.S. energy giants in the region, alongside plans to expand operations in the Mediterranean basin through potential agreements with Syria. This could grant the U.S. a greater role in shaping regional energy corridors and enhance its ability to influence supplies destined for global markets.
Following the unveiling of the agreement, Iran launched a missile strike on the Al-Tanf area of southeastern Syria. Iran’s Islamic Revolutionary Guard Corps (IRGC) officially claimed responsibility, saying the attack targeted a U.S. Special Operations command center. The timing of the strike could suggest that Iran sought to convey a message—that it could resort to escalation and destabilization if Damascus and Baghdad proceed with a U.S.-backed regional strategy aimed at curbing Iranian influence and severing its economic and security corridors.
Ultimately, the Syrian-Iraqi oil pipeline project represents more than just a new trade route. Rather, it appears to be part of a broader process of reshaping energy and influence networks in the region. Iraq is seeking to diversify its export outlets, while Syria aims to generate revenue and reclaim its role as a regional energy transit hub. For its part, the U.S. wants to mitigate the risks associated with the Strait of Hormuz, bolster the presence of American firms, and curtail Iranian leverage in both countries.
Yet the project’s implementation hinges on transforming the provisional deal into a binding agreement, obtaining funding, and securing the route of the pipeline. Consequently, the project is likely to become another focal point for regional rivalry: Washington will work to cement it as an economic and security asset, whereas Iran may seek to disrupt it or drive up its costs—whether through political pressure within Iraq or by instigating security threats along the pipeline’s route.