The overthrow of Syrian president Bashar al-Assad has left the country's trading relationship with Iran on an uncertain footing, putting pressure on the new transitional government to upgrade refining infrastructure and find alternative sources of fuel supply.
As the Assad regime's closest ally, Iran has been Syria's main source of both crude and oil product imports since western sanctions were imposed on Damascas in the early stages of its civil war in 2011. The product shipments are difficult to track as they are carried out by Iran's 'dark fleet', but consultancy FGE estimates Iran has been sending around 10,000-20,000 b/d to Syria in recent years.
Those trade flows are no longer guaranteed, given that Hayat Tahir al-Sham (HTS), the main militant group behind the armed revolt to topple Assad, has close ties to Iran's regional rival Turkey.
Syria is now likely to import oil products from other local sources, a trading analyst told Argus. Turkey itself is an option, although one Turkish trader ruled out any immediate business plans to supply Syria. Watad, HTS' affiliated oil trading arm, has previously imported oil and gas from Turkey and has marketed gasoline thought to have come from Ukraine via Turkey, according to a regional analyst.
Egypt is another possible supplier. It has enough capacity to export refined products to Syria for the time being, according to a refining source in the country. Vortexa data show gasoil was last loaded from Egypt's Sidi Kerir terminal in July.
Syria's transitional government may also attempt to increase domestic supply, although that will require rehabilitating the country's 140,000 b/d Banias and 110,000 b/d Homs refineries. Run rates have halved since 2011, the IEA estimates. Only the Banias refinery is operating at a reasonable level, according to sources. Iran earlier this year proposed a €140mn revamp of the Homs refinery, which has been operating below capacity for years because of infrastructure damage incurred during the civil war.
Syrian demand for oil products has seen a structural decline since the civil war, with consumption dropping by around 60pc between 2011 and 2022, according to the IEA. But with Assad's overthrow signalling a potential return of refugees from neighbouring Turkey, Lebanon and Jordan, demand may pick up in the coming months, intensifying pressure on the transitional administration to seek new trade flows and repair the country's refining infrastructure.
