分类： business

A landmark transnational energy project is set to move forward after senior Iraqi and regional officials confirmed to Middle East Eye that Iraq, Syria and the United States have reached an agreement to reactivate the decades-old Kirkuk-Baniyas oil pipeline, a 500-mile corridor stretching from northern Iraq’s major oil fields to Syria’s Mediterranean coastline. The initiative is framed explicitly as a strategy to reduce Iraq’s overreliance on the Strait of Hormuz, where Iran has tightened control amid escalating regional tensions tied to the US-Israeli war. The formal unveiling of the agreement is scheduled for next week, during Iraqi Prime Minister Ali al-Zaidi’s upcoming visit to the White House for talks with US President Donald Trump, sources confirmed.

Leading the behind-the-scenes negotiations on the US side is Tom Barrack, Trump’s ambassador to Turkey and special envoy for Syria and Iraq, who has spent weeks ironing out project details ahead of Zaidi’s trip, which will also include a stop in Texas, America’s core energy production hub. Senior Iraqi sources tell MEE that Barrack has built a strong working partnership with Zaidi, and frames the pipeline project as a blueprint for future US-aligned commercial development across the Levant that would deliver mutual benefits to Washington and regional host governments.

Originally completed in 1952 by the Iraq Petroleum Company, the pipeline was built to carry up to 300,000 barrels of crude oil per day. It was shut down by Baghdad in the 1980s after Syria aligned with Iran during the Iran-Iraq War, then suffered extensive damage following the 2003 US-led invasion of Iraq, leaving it completely non-functional for decades.

Extensive modernization and reconstruction work will be required to bring the corridor back online, including new storage infrastructure, upgraded pumping stations and replacement electrical systems. One senior regional official told MEE that a full, wholesale replacement of the aging pipeline is the most likely path forward, with a total construction timeline of two to three years. The official added that a consortium of US energy firms has already been assembled to lead the reconstruction effort, a clear signal of the US government’s commitment to advancing the project.

Initial discussions between Baghdad and the new Syrian government to revive the pipeline first emerged in late 2024, shortly after Islamist militias loyal to Syrian President Ahmed al-Sharaa ousted long-time ruler Bashar al-Assad. Those early talks failed to gain sufficient momentum to move forward, until shifting regional dynamics created new urgency for the project.

That urgency stems directly from Iran’s expanding control over the Strait of Hormuz amid the ongoing regional war. In recent months, Iraq has relied on small-scale crude exports via tanker trucks crossing into Syria, but volumes have been far too low to meet Baghdad’s revenue needs.

“Iraq has started to see Syria in a different light,” independent Iraqi analyst Sarhang Hamasaeed told MEE. “Prior to the war, there was deep skepticism. The reality of the war made it clear that Iraq needs Syria as an alternative export route.”

Regional sources confirm that Syrian Foreign Minister Asaad al-Shaibani will travel to the US to attend the official signing ceremony for the pipeline agreement. The project comes amid a sweeping reset in US-Syria relations: after al-Sharaa toppled Assad, he aligned with Washington, and now enjoys strong backing from Turkey and Gulf powers including Qatar and Saudi Arabia. The Trump administration has already rolled back multiple layers of sanctions on Syria, including sanctions on al-Sharaa’s former rebel group Hay’at Tahrir al-Sham (HTS), which evolved from al-Qaeda’s former Syrian affiliate al-Nusra Front.

Last week at a NATO summit in Ankara, Trump issued unusually public praise for al-Sharaa, calling him “fantastic” and “highly respected”. The US also announced last week it would remove Syria from its list of State Sponsors of Terrorism, a designation the country had held since 1979. The delisting clears a major regulatory hurdle for US firms to participate in the pipeline project.

Earlier this month, the Iraqi government already approved a preliminary agreement for US firms Capital TI and Chevron, alongside a Qatari energy company, to explore development of both the original Kirkuk-Baniyas route and a second line from the Iraqi oil hub of Haditha in Anbar Province to Baniyas.

For Iraq, the stakes of the project could not be higher. Roughly 95% of Iraq’s oil exports currently flow through the Strait of Hormuz, leaving the country extremely vulnerable to Iran’s chokehold on the waterway. Data from energy analytics firm Vortexa released last month shows that Iraq’s seaborne oil exports in May fell to just 8% of the 2024 average. With oil sales accounting for 90% of the Iraqi government’s annual budget, the disruption has created a severe fiscal crisis for Baghdad, making an alternative export route a matter of national economic survival.

Baghdad’s ruling coalition is dominated by Shia political parties and militias with close ties to Iran, which have historically been wary of partnering with al-Sharaa, a Sunni leader with a history as a hardline Islamist insurgent. But the acute economic pressure from disrupted Hormuz exports has pushed Baghdad to prioritize the project despite internal opposition.

The world’s largest automotive market, China, has delivered a sharp blow to top German automakers, with the April-June quarter of this year seeing double-digit sales declines that have hit global profit margins and forced strategic overhauls for major brands.

Newly released corporate data from the past week reveals that all four leading German brands — Volkswagen, Mercedes-Benz, BMW, and Porsche — suffered year-on-year sales drops between 30% and 41% in the second quarter alone. For the first half of 2024, the decline extended across all four manufacturers, with each reporting a year-on-year fall of more than 20% in Chinese deliveries. These slumps have squeezed overall corporate profits, in many cases erasing sales and revenue gains secured in other regional markets around the world.

The downturn in China comes at a particularly challenging moment for these legacy European automakers, who now face rising competition from Chinese brands not only in China but also in overseas markets, including their home region of Europe. Chinese EV leader BYD has already made significant inroads into European markets, challenging the historical dominance of German brands in their core segments.

Industry analysts note that the latest quarterly declines are among the most severe recorded by German automakers in modern Chinese market history. For example, Volkswagen Group, which has staked its long-term growth on heavy investment in the Chinese market, reported a 36.6% drop in second-quarter deliveries, totaling 424,300 vehicles. This decline was severe enough to drag the group’s global sales down 8.6% year-on-year, even as Volkswagen recorded delivery growth in both the European and North American markets. In response to the steep drop, Volkswagen has announced plans to cut its existing model lineup by as much as half to streamline operations and cut costs.

Multiple overlapping factors have driven the slump in sales for foreign automakers. China’s ongoing economic slowdown and prolonged downturn in the property sector have weighed heavily on consumer confidence, pushing many households to delay large-ticket purchases like new vehicles. Within the auto market itself, years of aggressive price competition have put established European brands under severe pressure, as cost-conscious consumers increasingly shift to more affordable models from domestic Chinese manufacturers.

Official industry data underscores the scale of the market contraction: the China Association of Automobile Manufacturers reports that total domestic passenger vehicle sales fell 24% year-on-year in the first half of the year, dropping to just under 8.3 million units. Global consultancy AlixPartners projects that full-year 2024 light vehicle sales across China will decline by roughly 10% from 2023 levels.

Beyond weak consumer demand, structural shifts in the Chinese auto market are working against German manufacturers. Unlike domestic Chinese brands, which have prioritized rapid expansion in the fast-growing electric vehicle (EV) segment, German automakers still retain their core strength in conventional internal combustion engine (ICE) vehicles, a segment that is contracting far faster than the overall market in China, where EV sales have outpaced ICE vehicle growth by a wide margin.

Chinese brands also hold an additional operational advantage: they refresh their model lineups far more frequently than foreign legacy manufacturers, allowing them to respond faster to shifting consumer preferences and introduce new technology at a quicker pace.

“Foreign automakers are going to have to fight for every share of the market,” Stephen Dyer, Asia-Pacific leader of the automotive practice at AlixPartners, noted in a recent news briefing. Independent auto analyst Lei Xing echoed this assessment, saying, “The German automakers are bearing most of the brunt” of the current market downturn and competitive shift, a sentiment echoed by brand representatives. Porsche, a Volkswagen Group subsidiary, described China’s current market conditions as “challenging” in an official statement, while Mercedes-Benz acknowledged that China is facing “a significantly weaker overall market and macroeconomic environment.”

The United Arab Emirates has reached an unprecedented all-time high in crude oil production just one month after withdrawing from the Saudi-led Opec alliance, new data shows, as the Gulf producer shrugs off geopolitical risks surrounding Iranian control of the Strait of Hormuz to seize full advantage of its new market autonomy.

In a recently published report released Friday, data from the International Atomic Energy Agency confirms the UAE pumped 4.1 million barrels of crude per day in June. This marks a dramatic 600,000 barrel per day increase over the country’s 2025 average production of 3.5 million bpd, and it outstrips the UAE’s prior record output of 4 million bpd set in 2020, a period when the Opec+ alliance was fractured by a brutal price war between Saudi Arabia and Russia.

The sharp production surge aligns with longstanding assessments from energy analysts that Abu Dhabi had long felt constrained by production quotas set under Saudi leadership within Opec. Over recent years, the UAE has poured billions of dollars into expanding its total oil production capacity, but repeatedly raised objections to Saudi Arabia’s coordinated supply cuts, which were designed to prop up global crude prices and blocked the UAE from maximizing its output.

Abu Dhabi formalized its exit from Opec in May, a move that came amid a broader rift with Saudi Arabia that extends beyond energy policy to include sharp disagreements over conflicts in Yemen and Sudan, as well as diplomatic stances toward Israel. The withdrawal has already drawn public approval from the Trump administration, which has prioritized keeping global energy prices stable amid the ongoing US-Israeli military campaign against Iran.

Geopolitical turmoil surrounding the Strait of Hormuz, a critical chokepoint through which roughly 20% of global oil supplies transit, has stirred widespread market volatility since the outbreak of the war in late February. At the peak of tensions earlier this year, when both Iran and the U.S. imposed blockades on the waterway, international benchmark Brent crude climbed above $100 per barrel. Contrary to the worst-case price spikes many analysts predicted, however, crude markets stabilized far faster than forecast.

Analysts attribute the contained price growth to two key factors: a historic release of strategic petroleum reserves from Western nations, and a 30% cut to China’s crude import volumes, which reduced overall global demand. This combination of expanded supply and softened demand has acted as a critical buffer for the fragile global economy, though the market has not been entirely unscathed: prices for key refined products including liquefied petroleum gas, diesel, and jet fuel have rallied significantly. Additionally, Asian energy buyers, who rely heavily on Gulf oil exports, have faced far steeper price hikes than customers in the United States and Western Europe.

The IAEA’s report also notes that while crude volumes are returning to global markets from the Gulf, refined product exports from the region remain less than 50% of pre-war levels. Despite this, the UAE’s ability to maintain consistent oil exports underscores its success in mitigating risks from Iranian control of the Strait of Hormuz.

The UAE operates a crude oil pipeline that bypasses the Strait of Hormuz entirely, delivering oil to the export terminal at Fujairah Port on the country’s east coast. The route is not entirely risk-free, however, as it remains vulnerable to potential Iranian drone attacks. In a June report, Reuters revealed the UAE paid billions of dollars to Iran in exchange for a halt to cross-border attacks, a major policy reversal for the country, which had joined the U.S. and Israel in launching dozens of strikes on Iranian targets since the outbreak of the war.

Maritime intelligence sources add that the UAE has also moved oil through the Strait of Hormuz using so-called “dark vessels” that operate with their automatic identification transponders turned off to hide their movements. The country has built its own dedicated fleet of oil tankers for these operations, and has also secured capacity from independent shipowners willing to accept the risk of Iranian strikes in exchange for far higher shipping rates.

NEW YORK – The International Energy Agency (IEA) has projected that global oil demand will experience an annual decline in 2026, marking the first such drop since the peak of the COVID-19 pandemic in 2020. The projected contraction, estimated at 1 million barrels per day for the full year, stems from elevated energy prices and unevenly distributed supply disruptions rooted in the ongoing conflict between the United States and Iran.

The core of the supply disruption centers on the Strait of Hormuz, the world’s most critical chokepoint for global oil and gas shipments. For more than three months, dozens of crude-laden tankers have remained stranded in the Persian Gulf, unable to traverse the waterway safely amid heightened hostilities between the two nations. Today, the strategic passage faces greater uncertainty than at the outbreak of the conflict, according to Jim Burkhard, vice president and head of crude oil research at S&P Global Energy. He noted that while Iran continues efforts to assert full control over the strait, the U.S. has failed to reestablish pre-war shipping norms, making a full return to baseline operations increasingly unlikely.

Recent demand data underscores the severity of the slowdown. Global average oil demand hit 97.9 million barrels per day in May 2026, a 5.3 million barrel per day drop from the same period one year prior. The steepest declines have been concentrated in Asia, a region heavily dependent on Middle Eastern energy imports. China alone accounts for a 1.5 million barrel per day reduction in demand – a 9% year-over-year drop, the largest of any major global economy.

China’s demand cutback stems from a deliberate policy decision to draw down its large strategic reserves rather than purchase crude at inflated market prices during the spring crisis, Burkhard explained. The country cut its crude import volumes by roughly 50 percent, temporarily halting additions to its strategic petroleum reserve that had previously averaged nearly 1 million barrels per day, according to Daniel Sternoff, senior fellow at the Center on Global Energy Policy at Columbia University. The conflict has also accelerated existing demand trends tied to China’s rapid electric vehicle adoption, which is cutting into gasoline and diesel consumption. Sternoff projects that China could see a permanent reduction of between 500,000 and 600,000 barrels per day in road fuel demand from this transition alone.

Counter to the global trend, the United States has seen unexpected growth in gasoline consumption during the second quarter of 2026, even as average pump prices rose 50% above pre-war levels to top $4.50 per gallon of regular gasoline in May, AAA data shows. Analysts point to two key factors for this anomaly: the share of U.S. household income devoted to gasoline has trended downward for decades, meaning even large price increases have a muted impact on driving behavior for most consumers. Additionally, the ongoing shift from remote work back to in-office office commutes has increased overall travel demand, offsetting any pullback from price sensitivity. “Even though it’s a really political price that people pay a lot of attention to, if you are in the higher quintiles of income in the U.S., you might grumble about it, but you’re not really driving less just because of that increase in prices,” Sternoff said.

The conflict has also created a paradoxical dynamic in global oil pricing that has prevented the sharp price spikes many market observers initially predicted. A fragile ceasefire reached in June allowed stranded tankers to exit the Strait of Hormuz, flooding the market with additional crude and pushing prices lower. Even when tensions escalated again earlier this month, prices failed to spike, as the conflict has settled into a predictable “gray zone” that no longer shocks markets, according to Burkhard. Reduced overall global demand, led by China’s cutbacks, has also kept upward price pressure in check. Additional supply-side constraints have hit downstream markets: multiple Russian refineries have been knocked offline by Ukrainian drone strikes, and Middle Eastern refining capacity remains damaged from the wider regional conflict, leaving refined product prices for gasoline and diesel far more inflated than crude prices. “There’s this gush of supply of crude oil being made available to the market, and there’s simply less demand for that crude oil,” Burkhard summed up.

BERLIN — Global automotive giant Volkswagen has disclosed steep second-quarter sales declines, headlined by a dramatic 30%-plus drop in its largest single market, China, just one day after announcing sweeping restructuring plans that could cut its model lineup by nearly half to counter slumping demand. Headquartered in Wolfsburg, Germany, the company reported Friday that total group deliveries fell 8.6% year-over-year in the three months ending June, reaching just under 2.1 million vehicles. Most of its major premium and mass-market brands recorded double-digit or notable single-digit declines: the core Volkswagen brand saw deliveries drop 14% to just over 1 million units, Audi slipped 8%, and Porsche fell 18%. Outliers included its supercar brand Lamborghini, Czech automaker Skoda, and its commercial trucks division, which all posted modest delivery gains. Regionally, sales also grew across the Americas and Europe, but these gains were not enough to offset the collapse in Chinese demand.

The restructuring announcement came Thursday following a meeting of Volkswagen’s board of directors, marking the next stage of a three-year company-wide “fundamental realignment” designed to adapt to a rapidly shifting global auto market. CEO Oliver Blume outlined that the overhaul will focus on cutting operational complexity, concentrating investment on core automotive technologies, aligning product strategies more closely to regional market needs, and trimming excess production capacity. Blume framed the changes as a necessary response to what he called an “increasingly demanding environment” for global automakers.

Volkswagen specifically called out a series of interconnected industry pressures that have built up over the past 12 months: escalating geopolitical tensions, rising input and operational costs driven largely by new tariffs, stricter emissions and regulatory requirements around the world, and intensifying competition from both established and new market players. As recently as last December, the company was making large, high-stakes investments in China to grow its market share, but local electric vehicle manufacturers have rapidly captured growing market share, leaving Volkswagen scrambling to catch up amid cutthroat competition.

Industry analysts have reacted with skepticism to the company’s restructuring claims. Research firm BernsteinSG noted in a client note published after Thursday’s announcement that Volkswagen’s claim to be extending its technology leadership is likely to draw doubt, given the far faster pace of innovation from the Chinese EV manufacturers that are displacing it in its once-secure Chinese market.

The restructuring plans have also sparked pushback from Volkswagen’s workforce. Hundreds of employees gathered outside the company’s EV-only plant in Zwickau on Thursday to protest the proposed changes, demanding formal job protections and opposing rumored plans to shut down the facility.