Baghdad's Agreement to Resume Oil Exports from Kurdistan Region After Two Years

The Iraqi Ministry of Oil announced that after a two-year hiatus, oil exports from the Kurdistan Region will resume next week following a meeting between leaders of the central government in Baghdad and the Kurdistan Region. Previously, Reuters reported that the Trump administration had increased pressure on Iraq to restart oil exports from the Kurdistan Region as part of its campaign to reduce Iranian oil exports, threatening that otherwise, Iraq would face Washington's sanctions like Iran. The Iraqi Ministry of Oil denied the existence of pressure or threats of sanctions from the U.S., but hours after Reuters' report, Iraqi Prime Minister Mohammed Shia' al-Sudani met with Nechirvan Barzani, the head of the Kurdistan Region, and announced the urgent need to resume oil exports from the Kurdistan Region to the Turkish port of Ceyhan. Oil exports from the Kurdistan Region to global markets were halted in March 2023 following an international court ruling to stop independent oil exports from the Kurdistan Region and a $1.5 billion fine imposed on Turkey. The new statement from the Iraqi Ministry of Oil also clarified that the Kurdistan Region must hand over its produced oil to the Iraqi central government's National Oil Trading Company to be transported to the Ceyhan port. The volume of oil exported from the Kurdistan Region will be based on Iraq's commitments to the OPEC production cut agreement and allied countries. Before the pipeline transporting oil from northern Iraq to the Ceyhan port was halted, approximately 400,000 barrels of oil from the Kurdistan Region, along with 70,000 barrels from the Kirkuk region, were sent to international markets daily. However, reports indicate that over the past two years, about 200,000 barrels of oil from this region have been smuggled to Iran, with some also going to Turkey. An Iraqi oil official familiar with the oil transfer to Iran told Reuters, 'The U.S. is pressuring Baghdad to export Kurdistan oil through Turkey to global markets instead of selling it cheaply to Iran.' Reuters writes that the Trump administration aims to curb global oil price increases due to the decline in Iranian oil exports under the revived 'maximum pressure' policy. Even without accounting for the smuggled oil from the Kurdistan Region to Iran and Turkey, Iraq had $95 billion in oil exports last year, which is more than three times Iran's oil export revenues in the first ten months of the current Persian year.