International eyes are focused on Iraq as eight oil companies operating within the semi-autonomous Kurdistan Region have opted not to resume oil exports via the Turkish port of Ceyhan. Despite the Iraqi government’s announcement of imminent resumption, these companies remain grounded, citing unresolved financial and contract negotiations.
According to Reuters, the U.S. has been putting pressure on Baghdad to permit the restart of oil shipments from the Kurdish region, which could help augment global oil supplies amid efforts to reduce Iranian oil exports as part of Washington’s maximum pressure campaign. The Iraqi government appears torn between its alliances with both Washington and Tehran, as worries loom about being caught between conflicting policies.
Last week, Iraqi Oil Minister Hayyan Abdul-Ghani announced plans for the pipeline to recommence oil exports soon, reporting earlier this morning, on March 1, 2025, the intention to return to production levels as part of the federal budget. The Iraqi Oil Ministry released statements proclaiming the eventual export of approximately 185,000 barrels daily, gradually increasing over time through its marketing company, SOMO.
Nevertheless, the Kurdish Oil Producers Association (APIKOR), representing about 60% of the regional production, later stated there has been no formal communication about the agreements overseeing trade and payment guarantees for past and future exports. APIKOR’s spokesperson, Miles Kaginz, firmly expressed, “For clarification, the member companies of APIKOR will not resume oil exports today.” This stands as a stark reminder of the tensions simmering beneath the surface.
This impasse can be traced back to events from March 2023 when Turkey halted the flow of oil through the pipeline after the International Chamber of Commerce ordered Ankara to pay $1.5 billion to Baghdad over unauthorized exports made between 2014 and 2018. Recently, on Sunday, Kurdish authorities indicated they had reached preliminary agreements with the federal oil ministry, intending to resume exports based on available volumes after resolving their long-standing disputes with Baghdad.
Nonetheless, Iraqi officials have consistently denied rumors of U.S. pressure or threats of sanctions tied to the Kurdish oil exports, even as discussions within Iraq’s government develop with caution. Notably, some Iraqi representatives are now pushing forward legal attempts to deem the Kurdish production-sharing agreements illegal by presenting new evidence to courts, casting doubt on the source of oil slated for export.
At the same time, the oil market is reacting; as reported last week, oil prices fell over one percent, showing apprehension toward potential tariffs from the U.S. and the uncertain ramifications of Iraq’s planned return to oil exports from the Kurdish territory. The market sentiment, as reported, has been quite bearish, impacted by the anticipated possibility of increased output amid simmering tensions within OPEC’s production management.
With the latest moves by Baghdad to resume oil exports amid these tensions, speculators question the potential ramifications on their compliance with OPEC+ production agreements. Expert commentary from Harry Tchingor, lead researcher at Onyx Capital, voiced, “The resumption of exports raises questions about how Iraq will adhere to its commitments under OPEC+, especially since it has consistently outproduced its quota,” which raises eyebrows among member nations over oil supply adequacy.
During these unprecedented negotiations, the atmosphere for financial markets remains decidedly tense. Various pressures mount, including U.S. tariff threats against Mexican and Canadian imports alongside additional duties on Chinese goods expected to initiate on March 4, 2025. Industry insiders warn this trade war could slow global economic growth, resulting in inflation spikes and reduced demand for crude oil.
Meanwhile, investors are grappling with these uncertainties, alongside the delicate balance of the OPEC+ alliance which seems to be reconsidering its plans to increase oil production come April 2025. The future of Iraqi oil production is seen as both promise and peril, demanding careful navigation through these politically charged times.
According to analysts at Fitch’s BMI Research unit, the tension riddling the markets is evident as stakeholders struggle to gauge the effects of new policy developments surrounding energy, particularly amid the fluctuated prices. Reuters has projected Brent crude prices will average around $74.63 per barrel for 2025, with West Texas Intermediate prices approximated at about $70.66 per barrel.
With the growing geopolitical stakes and the region's economically intertwined dynamics, the Kurdistan oil export issue remains at the forefront of international interest, as players engage with the ramifications on both local and global scales. Until resolutions are reached, the situation is ripe with uncertainty, embodying the fragility of oil politics in Iraq.