Iraqi and Kurdish officials signed a deal to restart northern oil exports through Turkey, ending a halt that had been in place since 25 March after Iraq won an international arbitration case against Turkey, reported Reuters on Tuesday.
The deal was announced by the Kurdistan Regional Government (KRG) Prime Minister Masrour Barzani via his Twitter account, where he described it as respecting the rights of the KRG under the constitution while putting Iraq on a stronger footing.
Under the deal, Iraq’s state-owned marketing company SOMO will have the authority to market and export Kurdish oil, with the revenues deposited in an account at the Iraqi Central Bank under the control of the KRG. Baghdad will have access to audit the account, and the deal is expected to be temporary until the budget law passes in parliament.
The halt in oil exports had caused disruptions to the global energy supply, and oil prices had risen to nearly $80 per barrel last week. Prior to the halt, the autonomous region was exporting around 450,000 barrels per day of crude, which had been an economic lifeline for Iraq’s Kurdistan region. The end of the KRG’s independent oil exports had also curtailed its autonomy.
The agreement had been reached following an international arbitration ruling that halted the KRG’s oil exports through Turkey. The ruling had ordered Turkey to pay around $1.5 billion to Iraq, signalling the end of the KRG’s independent oil exports. Nine years after the case began, the International Chamber of Commerce had ruled in Iraq’s favour, ordering Turkey to pay damages for violating the 1973 pipeline transit agreement. While Turkey and the KRG lost, the penalty was less than what Iraqi officials had demanded, making it an incomplete victory for Baghdad.
The negotiations had involved multiple players, including Turkey, Iraq, Iran, the US, Russia, and potentially China. The US had urged Iraq and Turkey to resume oil flow from Iraqi Kurdistan, with state department officials publicly emphasising that disruptions to the global energy supply serve no one’s interest.
Barzani had travelled to Baghdad to finalise the agreement with Iraqi Prime Minister Mohammed al-Sudani. “Everyone must abide by this agreement and implement it,” al-Sudani said in a joint news briefing with Barzani.