FACTBOX: Trump lifts Syria sanctions, opening door to oil sector revival

US sanctions on Syria were officially lifted by President Donald Trump on June 30, following earlier moves by the EU and the UK to ease economic curbs on the country which are expected to further reopen its access to international markets, enabling oil exports and imports and securing investment needed to rehabilitate its oil and gas sector.

Sanctions on Syria's oil ministry and maritime authority, its two refineries, and other energy-related entities have been waived in a move that analysts see as a significant step forward. The Syria Trading Oil Company, or Sytrol, is also now sanction-free. Sytrol has issued various tenders, including for LPG and gasoil, but many countries that abide by US sanctions have been cautious to engage with Syria's oil trading arm.

The tide could now be turning, with sanctions relief and plans to lift export controls clear signs of a change of approach. However, there is still a long path ahead, with some sanctions left in place, like those on the former Bashar al-Assad regime and some individuals linked to it.

Trump's executive order called for the terrorist designation of Syria's leadership by Hayat Tahrir al-Sham to be reviewed, which would be a crucial step in normalizing dealings with the government and its leader, Ahmed al-Sharaa, who is also a US-designated terrorist. That categorization is also to be reviewed.

The designations on Sharaa and HTS have kept many Western nations at bay, fearing they may find themselves ensnared in secondary sanctions. Revoking the terrorist designation may pave the way for greater engagement with the Syrian government, which has had to rely on foreign aid and shipments of Russian crude and oil products.

Far-reaching Caesar sanctions, which were paused for 180 days in late May, will also be reviewed. The Caesar Syria Civilian Protection Act, passed in 2019, imposed some of the toughest sanctions on most aspects of life and business in Syria, including its energy sector, effectively blocking most international investment in the country's oil, gas and electricity infrastructure.

The following are key facts about Syria's oil sector and the impact of sanctions relief:

Trade flows

• Syria aims to restore crude exports that once contributed $3 billion to its economy before the 2011 civil war began.
• Syria's crude production has plummeted to approximately 90,000 b/d from 442,000 b/d in 2004, severely limiting export potential until production recovers, according to S&P Global Commodity Insights data.
• Before sanctions, Syria was a significant crude exporter to Mediterranean markets, but its refineries lacked capacity to fully meet domestic demand, creating a net fuel import deficit of roughly 70,000 b/d.
• Turkey has emerged as a prominent LPG exporter to Syria over the past year, while Russia has supplied the country with gasoil and crude oil, helping restart operations at facilities such as the Banias refinery.
• Syria imported 9.26 million barrels of crude, fuel oil, clean products and LPG on 18 ships over February-June, according to S&P Global Commodities at Sea. Two-thirds of the tankers are sanctioned.
• Syria resumed fuel shipments from its largest refinery, Banias, on June 16 for the first time in over six months, with the Velos Fortuna tanker lifting an unspecified clean oil product cargo.
• The country continues to issue urgent tenders for fuel imports, including a recent call for 25,000 mt of monthly LPG supplies for July-September, highlighting ongoing domestic shortages.
• Before the 2011 uprising, Syria was a net oil exporter, and demand for oil derivatives was met by refining crude domestically. Syria became a net oil importer in 2012.
• Before the imposition of sanctions on Syrian crude, the country normally exported around 150,000 b/d of crude, or six to seven cargoes per month of Syrian Heavy and Syrian Light, with the bulk of the shipments going to European refiners in Germany and Italy.
• Syria had become increasingly reliant on oil imports, primarily from Iran, to satisfy its domestic consumption needs, which also decreased to 163,000 b/d in 2024 from 305,000 b/d in 2010. But those flows halted after the ouster of former dictator Bashar al-Assad.

Infrastructure

• Syria's energy infrastructure suffered extensive damage during the civil war, requiring significant investment for rehabilitation.
• Syria's oil fields currently have the capacity to produce up to 200,000 b/d but cannot operate at full capacity due to damaged pipeline infrastructure and refineries, according to Energy Minister Mohammed El Bashir.
• Work to repair some domestic pipelines is underway, and the Homs-Hama oil transfer line restarted on June 17 after a 14-year halt.
• The country's two main refineries, Banias (120,000 b/d) and Homs (110,000 b/d), have a combined nameplate capacity of around 230,000 b/d but were operating at roughly 70,000 b/d before recent regime changes.
• The Homs refinery can currently process only around 15,000 b/d due to war damage and lack of maintenance, severely limiting domestic refining capabilities.
• The Iraq-Syria pipeline, once a major export route for Iraqi oil before 1990, requires "total rehabilitation," according to Syrian officials, presenting both a challenge and opportunity for regional energy integration.
• Control of oil infrastructure remains politically contentious, with many of the eastern oil-rich regions still under the control of the Kurdish-led Autonomous Administration of North and East Syria, complicating investment prospects.

Prices

• The removal of sanctions could eventually increase Syrian oil supply to global markets, though significant production increases will take time.
• It could be easier for Sytrol to tender for products, though payment terms may still complicate matters.
• Syrian crude grades, which are predominantly medium-heavy sour varieties, could eventually compete with similar Mediterranean grades once production and export infrastructure are restored.
• The Syrian Ministry of Petroleum continues to issue public tenders for LPG, gasoline, diesel and crude oil, often marked with "utmost urgency," indicating tight domestic supplies and potential premium pricing.
• Turkey's agreement to triple electricity exports to Syria to around 1,000 MW and supply up to 2 Bcm/year of natural gas could help stabilize domestic energy prices in Syria.
• International investment terms will be crucial for attracting capital, with Syria's pre-war fiscal terms considered tough at over 90% government take, rated "F" (2) on the Government Take rating system.