The Economic Impact of Losing Kirkuk on the Kurdistan Region

After the independence referendum in Iraqi Kurdistan, the central government of Iraq sent military forces to regain control of all disputed areas with the Kurdistan Region. One of these areas is the important oil field of Kirkuk in northern Iraq, the loss of which has had a significant impact on the Kurdistan Region. Reuters, in discussions with local sources, has prepared a report on these impacts. Kurdish oil sources have informed the news agency that the local government of Iraqi Kurdistan has lost more than $200 million in revenue over the past week due to the loss of Kirkuk. Before the independence referendum, the Kurdistan Region was exporting 600,000 barrels of crude oil through Turkey, which reportedly made the region almost economically independent, as it could pay its bills without needing budget transfers from Baghdad. According to this report, this new development has reduced oil production in the Kurdistan Region to less than half, and oil exports from the region through Turkey have lost two-thirds of their volume in global markets. With the loss of control over the Kirkuk region, the Kurdistan Region will only produce about 250,000 to 300,000 barrels of oil per day, which is insufficient to cover the financial obligations and payments of the regional government. A senior source in the Kurdistan oil industry told Reuters that the fear of workers from the approaching Shiite militias and stories of warnings given by Qassem Soleimani, the commander of the Quds Force of the Islamic Revolutionary Guard Corps, about evacuating the region have caused panic and mass flight among the Kirkuk oil industry personnel. Reuters reported on Thursday, October 26, that the oil revenues from Kirkuk were of vital importance to the regional government, and the loss of control over these oil fields is likely to bring significant difficulties for Iraqi Kurdistan. The report also notes that major global trading houses such as Vitol and Glencore, which had provided billions of dollars in loans for the oil industry in the region, are now facing severe concerns, and this trend will have a significant negative impact on the future of financial transactions with the Kurdistan Region. According to this report, engineers and workers from oil companies who have come from Baghdad to Kirkuk have not yet succeeded in operating the oil processing equipment because they do not have the passwords, and the Baghdad government intends to attract some of the Kurdish workers who fled the area back to Kirkuk for this purpose. Iraqi oil engineers stationed in Baghdad who have come to the region told Reuters that when they entered the Kirkuk facilities, the safety clothing and boots of refinery workers were scattered on the ground, indicating their hasty flight from these facilities. Kurdish Peshmerga commanders have accused the Islamic Republic of Iran of directing the forces of the central Iraqi government and the Shiite militia (Popular Mobilization Forces) it supports to retake control of Kirkuk and other areas under Kurdish control. Iranian officials, including Ali Akbar Velayati, advisor to the Supreme Leader of the Islamic Republic, have denied these accusations. These areas were under the control of the Iraqi government before the widespread invasion of the Islamic State group (ISIS) in 2014.