On Friday, February 28, 2025, Hayan Abdul Ghani, Iraq’s Deputy Prime Minister for Energy and Oil Minister, announced the resumption of oil exports from Iraq via the Turkish port of Ceyhan. This pivotal decision, with initial exports expected to reach 185,000 barrels per day, aims to restore Iraq's economic stability following substantial financial losses incurred during the prolonged halt of exports.
Abdul Ghani expressed optimism about the speed of resuming operations, stating, "We are establishing the basis for resuming oil exports through SOMO to the port of Ceyhan, beginning with 185,000 barrels daily." This announcement follows nearly two years of disruption, with shipments from Iraq to Turkey ceasing on March 25, 2023, due to legal disputes and financial penalties imposed by international arbitration.
The ramifications of this announcement are already being felt across the Arab markets. Analysts predict crude oil prices are likely to rise as Iraqi oil begins to flow again. Significant losses amounting to over $23 billion for Iraq during the export interruption highlighted the urgency behind this resumption.
Despite Baghdad's proactive measures, skepticism remains among several international oil companies, especially those operating within the Kurdistan region of Iraq. Eight firms, including prominent players like Gulf Keystone Petroleum and DNO, stated they would not resume operations immediately, reinforcing the uncertainty surrounding the situation. Miles Kajins, spokesperson for the Kurdistan Oil Industry Association (APIKOR), mentioned, "Our members, including Gulf Keystone and DNO, will not resume exports today." This hesitation highlights the complexity of intercompany relations and the political backdrop against which these operations exist.
The standoff surrounding oil exports bears significant geopolitical significance. With the U.S. pressing Baghdad to allow for the resumption of oil exports from the Kurdistan region, the stakes are high. The motivation behind this U.S. pressure is clear: to augment global oil supplies and exert pressure on Iran amid rising tensions. Reports indicate, "The U.S. is pressing Baghdad to allow oil exports from the Kurdistan region, or else risk facing similar sanctions to Iran," according to unnamed sources.
Turkey's previous halt of the oil flow was attributed not only to domestic legal disputes but also to complex international relations. The Turkish government halted the flow of oil after arbitration ruled against them and ordered the payment of $1.5 billion to Baghdad for unauthorized exports dating back several years. This legal backdrop adds layers of complexity to the already volatile relationship between Iraq and its neighbors, particularly Turkey and Iran.
While the potential resumption of oil exports may lead to financial recovery for Iraq, the future remains uncertain. The relativity of how international firms cooperate is under scrutiny as stakeholders await clarification on agreements and safe payment structures from Baghdad concerning past and future exports. Much hinges on finding common ground between the Iraqi government and the Kurdish regional authority.
With the political complexity surrounding Iraqi oil exports continuing to evolve, it is evident the region’s market dynamics are undergoing transformation. Increased oil flow from Iraq could significantly impact crude prices, balancing supply and demand amid global fluctuations. The historical ties between oil policies and political alliances within the region remain as relevant as ever, with the actions of the U.S., Turkey, and Iran continuing to shape the future of energy markets.
The coming weeks will be closely monitored as Baghdad and international oil corporations navigate this new territory. If the sale of oil proceeds as planned, the outlook for Iraq could shift dramatically. For now, ambiguity looms large, leaving analysts and industry players to speculate about the long-term impact of these developments on oil prices and the regional economy.