The United States and Iraq announced roughly $60 billion in new agreements aimed at expanding Iraq’s energy sector and creating alternative routes to move oil to global markets without relying as heavily on the Strait of Hormuz. The deals also include investments in healthcare, communications, and infrastructure. However, the energy sector components are receiving the greatest attention as the conflict with Iran approaches its sixth month.

Chevron signed three agreements with the Iraqi government, including projects to increase oil production and help develop a new export pipeline. The United States also welcomed Iraq and Syria’s agreement to rehabilitate an existing pipeline connecting southern Iraq with ports in Turkey and Syria. Iraqi officials estimate that the completed route could eventually transport about 2 million barrels of oil per day.

The agreements come after months of conflict between the United States and Iran disrupted shipping through the Strait of Hormuz, one of the world’s most important energy corridors. Repeated threats to the waterway have pushed oil prices higher and increased concerns about global energy supplies. While new pipelines would take years to complete, U.S. and Iraqi officials believe they are outlining all of their contingencies to provide a more resilient network for transporting oil if future conflicts threaten maritime shipping.

These agreements could have major ripple effects across global markets over the next several years. As of today, one-fifth of the world’s oil still passes through the Strait of Hormuz, making it one of the most strategically important waterways on Earth. Any military conflict, blockade, or disruption there can quickly drive up fuel prices and create uncertainty for businesses and consumers around the world.

But by investing in pipelines set to run through Iraq, Syria, and Turkey, the United States and its partners are trying to reduce that dependence. A more diversified network would give energy producers additional export options if shipping through the Strait of Hormuz becomes too risky or expensive. These projects will take years to complete, but their intended purpose is to strengthen the long-term energy security of the United States rather than leaving us purely reactive to future conflicts as our only options.

Oil is inextricably tied to nearly every part of the economy, from trucking and air travel to manufacturing and agriculture. When supply lines can be insulated from major disruptions, businesses have a far better chance of avoiding sudden increases in cost that inevitably trickle down into family budgets.

As U.S. firms take on larger roles in these projects, they stand to win contracts, expand overseas operations, and support jobs back at home. While the pipelines will take years to complete and will not eliminate the risk of future energy shocks, they do provide a potential solution to make global oil markets less dependent on a single, highly contested waterway.