What Led to Iraq’s Kurdish Oil Export Restart This Saturday?

Iraq is preparing to restart oil exports from its semi-autonomous Kurdish region on Saturday, a major breakthrough following a suspension that lasted over two years.

The new agreement resolves a long-standing dispute between Baghdad and the Kurdistan Regional Government and comes after significant financial losses for the country.

The restart of the Iraq-Turkey pipeline will restore the flow of Kurdish oil to international markets and is anticipated to strengthen Iraq's economy and unify oil policy.

The deal signals a new chapter in Kurdish-federal relations and has garnered international attention for its potential to impact regional energy dynamics.

Why Was Kurdish Oil Export Stopped for So Long?

The shutdown began in March 2023 after the International Chamber of Commerce ruled Turkey must pay Iraq $1.5 billion for transporting Kurdish oil without Baghdad’s permission.

The pipeline halt cut off more than 450,000 barrels per day to global markets, causing Iraq to forfeit upwards of $25 billion in revenue during the freeze.

Prolonged disputes over oil rights, payment arrangements, and control of export infrastructure contributed to the gridlock.

The loss in revenue affected both the federal budget and the welfare of the Kurdish region, creating mounting pressure to overcome barriers through negotiation.

Did you know?
The Kirkuk-Ceyhan pipeline has the capacity to transport over 1.5 million barrels of crude oil per day, but operated well below capacity before the 2023 shutdown.

How Did Baghdad and Kurdistan Reach a Breakthrough?

Months of negotiations culminated in a new tripartite agreement involving Iraq’s federal government, the Kurdistan Regional Government, and international oil producers.

Incentives for compromise grew as the economic costs mounted and regional stakeholders faced mounting debts and operational setbacks.

Prime Minister Mohammed al-Sudani and Kurdish officials agreed on a deal that includes federal management of crude sales and international oversight at key pipeline points.

The presence of U.S. Secretary of State Marco Rubio at the announcement underscored the deal’s international significance.

Which Companies and Nations Are Involved in the Restart?

Eight major international oil companies signed agreements to participate in the restart, including ShaMaran Petroleum, MOL, and others representing over 90% of Kurdistan’s output.

Production from key blocks, such as Atrush and Shaikan, will resume, supplying most of the pipeline’s throughput.

However, some large companies like DNO and Genel Energy chose to continue selling locally rather than join the restart, citing pricing and independent export arrangements.

Turkish officials confirmed their readiness to reactivate the pipeline and receive fresh shipments from Iraq.

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What Are the Terms of the Oil Export Agreement?

The new agreement allows the pipeline to pump 240,000 barrels daily, with most destined for global buyers and a portion reserved for Kurdish domestic needs.

Oil companies will receive $16 per barrel to cover production and transport, and the Iraqi State Organization for Marketing of Oil will handle international sales.

Payments to producers will be distributed in arrears, while a mechanism is planned to settle approximately $1 billion in outstanding debts owed to companies.

The deal will be reviewed in 2026, with future terms subject to negotiation based on market and operational outcomes.

How Will the Restart Shape Iraq’s Economic Future?

Resuming Kurdish exports is expected to restore billions in lost revenue, stabilize government finances, and bridge gaps between Baghdad and the Kurdistan region.

The revived pipeline should enhance Iraq’s standing as a major oil exporter, helping to meet global demand as energy markets grow increasingly complex.

Stakeholders will continue to meet to address debt settlements and monitor implementation.

If payments are handled fairly and oil flows remain uninterrupted, Iraq could see gains in both economic and political stability after years of contentious negotiations.