U.S. energy companies and the Iraqi government finalized agreements valued at approximately $60 billion on Friday aimed at developing alternative routes for exporting oil from the Arabian Gulf region. The contracts, signed at the U.S. Chamber of Commerce, also encompass sectors beyond energy, including healthcare, communications, and infrastructure.

The new initiatives seek to reduce dependency on the Strait of Hormuz, a strategic chokepoint through which about 20% of the world’s oil passes. The Strait has been a focal point of regional tension since the outbreak of hostilities between the United States and Iran on February 28, with Iran repeatedly threatening to close the waterway. Such developments have contributed to significant volatility in global oil markets.

Goldman Sachs analysts note that constructing new pipelines capable of serving as alternatives to the Strait will require at least two-and-a-half years due to the need for routes crossing multiple countries. Among the proposed projects is the rehabilitation of the Iraq-Syria crude oil pipeline, a priority infrastructure effort endorsed by the U.S. State Department. This pipeline is expected to run from Basra in southern Iraq to Haditha in western Iraq, then onward to the port of Ceyhan in Turkey and the port of Baniyas in Syria. Official projections estimate that the pipeline could carry up to 2 million barrels of oil per day.

Goldman Sachs projects that by the end of 2028, seven regional pipeline projects currently underway could handle approximately 14 million barrels daily, covering nearly 60% of the volume traditionally shipped through the Strait of Hormuz, which handled around 23 million barrels per day prior to the conflict.

The agreements were signed a day after Iraqi Prime Minister Ali Falah al-Zaidi met with Chevron executives in Houston, where he advocated for increased and accelerated U.S. investments in Iraq’s energy sector. Chevron confirmed three agreements with the Iraqi government, two focused on boosting oil production, and the third on investing in a pipeline that would create an alternative export route. Jake Spiering, Chevron’s president of corporate business development, highlighted the significance of the pipeline for enhancing global energy security.

Al-Zaidi emphasized Iraq’s desire for long-term partnerships rather than short-term contracts and underscored his government’s dedication to dialogue and cooperation with the U.S. Chamber of Commerce. He described the chamber as a critical venue where economic decisions are formulated.

The pipeline developments come amid continuing geopolitical complexities. Iraq hosts both U.S. military bases and Iran-backed militia forces, positioning it at the heart of regional tensions. Syria, still recovering from a prolonged civil war, has largely remained removed from direct conflict and has promoted itself as a stable alternative transit route for energy exports. Since the start of the war, some Iraqi oil shipments have been diverted overland through Syria to European markets via the Baniyas port, circumventing the Strait of Hormuz. The reopening of a key border crossing between northern Iraq and Syria in April, after more than ten years of closure, has further facilitated this alternative route.

While currently less efficient and more costly than maritime routes, these pipeline projects aim to scale up export capacity and diversify routes, potentially reshaping regional energy logistics amid ongoing instability in the Arabian Gulf.