WHY A NORTHERN IRAQ OIL DISPUTE DOESN’T STAY IN IRAQ
The MED This Week newsletter provides expert analysis and informed insights on the MENA region’s most significant issues and trends, bringing together unique opinions on the topic and reliable foresight on possible future scenarios. Today, we turn the spotlight on the struggle to resume oil exports from the semi-autonomous region of Iraqi Kurdistan via the Turkish port of Ceyhan. This comes after an agreement between Baghdad and Erbil was reached to end a long-standing dispute over the control of Iraq’s oil production.
Tensions between Iraq and Türkiye over oil export flows from Iraqi Kurdistan are not abating. On April 12, Baghdad petitioned a US federal court to force Ankara to comply with the International Court of Arbitration (ICC) ruling issued in late March. According to the ICC, Türkiye violated a joint agreement with Iraq by allowing the semi-autonomous region of Kurdistan (KRG) to export oil through the Kirkuk-Ceyhan pipeline without Baghdad’s consent. This is the latest episode in a string of disputes over the control of oil exports from northern Iraq that recently involved Ankara, Baghdad, and Erbil. A few days prior, Erbil and Baghdad signed a temporary agreement, under which Iraq’s state-owned oil company SOMO would have the right to market Kurdistan’s oil and deposit the revenues in an account with the Iraqi Central Bank controlled by the KRG. However, oil exports to Ceyhan so far have not resumed, and this risks compromising the entente reached by Erbil and Baghdad. While representing only a small portion of the global oil supply (about 0.5%), the disruptions of oil exports from northern Iraq have contributed to an increase in oil market prices (up to 80$ per barrel in late March) and caused significant economic damage to oil companies in the area. Moreover, the echoes of the energy shutdown have reverberated in European countries like Italy, since oil from northern Iraq became a key import for Rome following the ban on Russian crude. Finally, the dispute has also unsettled a highly volatile region, marked by the growing interference of Iran and Türkiye – whose latest actions in Iraqi Kurdistan prompted direct diplomatic intervention from Baghdad.
ISPI MED experts respond to the impact of the impasse on Kurdistan’s oil exports between Baghdad, Ankara, and Erbil.
