Oil at $117 lifts Iraq’s income, but tanker attack shows its Hormuz risk

BAGHDAD — Iraq stands to earn more as Brent crude settled at a six-month high of $117.64 a barrel on Friday, but the tanker attack behind the rise struck the Strait of Hormuz, its main export route.

Oil provides more than 90% of government revenue, and exports have only just recovered since shipping through the strait was disrupted in March by the U.S.-Israeli war with Iran. They climbed back above 3.4 million barrels a day in October, back to prewar levels, Oil Minister Basim Mohammed Khudair al-Abadi said Oct. 19. In July, Abadi put monthly oil revenue at about $1.5 billion, against $7 billion to $8 billion before the war.

Higher prices help only while Iraqi tankers can get through. The Ceyhan pipeline through Turkey carries about 200,000 to 230,000 barrels a day, oil expert Ziad al-Hashimi said this month, so most Iraqi crude still leaves Basra through Hormuz. Finance Committee member Abbas Ahyal has said the draft 2027 budget is built on oil at $58 a barrel, less than half Friday’s price.

A small boat approached an outbound tanker about 25 nautical miles northeast of the Omani port of Khasab and attached two explosive devices to its hull, the United Kingdom Maritime Trade Operations said Thursday. The British navy agency, which monitors shipping, said the blasts started a fire in the engine room that was later put out. The crew was safe and the ship continued its voyage, UKMTO said. It was not clear who carried out the attack.

Khasab is on Oman’s Musandam peninsula, which tankers carrying Basra crude pass on their way out of the Gulf. To rebuild exports, Iraq has used transfers to larger tankers near Sohar in Oman, outside the strait, with smaller vessels shuttling between Basra and the transfer point.

Brent, the global benchmark, rose 2.4% on the day its December contract expired, according to Friday’s trading data. The January contract, which now leads trading, gained 2.37% to $113.43. U.S. West Texas Intermediate crude climbed 2.08% to $104.12 a barrel.

The rise capped Brent’s 13.6% gain in October, when West Texas Intermediate rose 15.2%. Fears of wider escalation in the region and of attacks on energy facilities have pushed investors to reassess the risk of a global supply shortfall. With diplomatic efforts to contain the tensions still under way, prices remain exposed to sharp swings on any new political or military development.

Economists also point to tensions between Yemen’s Houthi movement and Saudi Arabia as a source of instability in energy markets. The Houthis said Thursday they had attacked several Saudi sites, including the Ras Tanura and Rabigh refineries. Iraqi Foreign Minister Fuad Hussein condemned Houthi attacks on civilian facilities in Saudi Arabia on Oct. 22.

Baghdad is pursuing routes that avoid the strait. Prime Minister Ali al-Zaidi and Syrian interim President Ahmed al-Sharaa on Wednesday discussed a pipeline that could carry up to 2 million barrels a day of Iraqi oil to Syria’s Mediterranean port of Baniyas, Zaidi’s office said, though no timetable or agreement was announced. Iraq agreed with Turkey in August on a minimum of 750,000 barrels a day through Ceyhan.