Iraq announced that it has reached a preliminary agreement with Oman to build a new crude oil pipeline and jointly market oil, a move officials say will diversify the country's export routes. 

The announcement follows a series of agreements signed during Iraqi Prime Minister Mohammed Shia’ al-Sudani’s visit to Muscat on Sept. 3, despite significant questions about the project's economic feasibility and potential geopolitical motivations.

Ali Nizar, director general of Iraq’s State Oil Marketing Organization (SOMO), confirmed initial discussions had led to a preliminary agreement. As a first step, the two nations will construct oil storage facilities with a capacity of 10 million barrels at Oman’s Duqm port.

"Once the storage tanks are completed, crude oil will initially be transported by tankers until the construction of the pipeline is finalized,” Nizar told local media.

The proposed pipeline would run from the southern city of Basra to Duqm, either overland or undersea through the Arabian Gulf. An undersea route would allow Iraq to bypass potential transit issues with neighboring countries.

However, analysts are skeptical of the project’s economic logic, citing the lengthy and costly route compared to closer alternatives in Turkey, Kuwait, the UAE, and Qatar, making many believe the project is driven more by strategic and security calculations than by commercial sense.

The move is seen by some as a way for Baghdad to reduce reliance on existing, but politically fraught export routes, with Turkey recently announcing it will terminate its decades-long pipeline agreement with Iraq in 2026. 

Iraq's main northern export pipeline through Turkey has been idled since 2023, following a legal dispute between Baghdad and Ankara over oil sales by the Kurdistan Regional Government.

The shutdown, which has caused major financial losses, is widely viewed as a political tool used by Baghdad to centralize control over oil revenues and limit the Kurdistan Region's economic autonomy. 

The pursuit of the expensive Oman pipeline appears to underscore Baghdad's willingness to prioritize strategic leverage over economic efficiency.