Negotiations to resume oil exports from the Kurdistan Region of Iraq through the Iraqi-Turkish pipeline are facing significant hurdles, primarily due to ongoing uncertainties surrounding payments and contracts. According to sources who spoke to Reuters, discussions that began in late February 2025 have yet to resolve a dispute that has effectively halted crude oil shipments from Iraqi Kurdistan to the Turkish port of Ceyhan for nearly two years.
The situation has drawn the attention of Washington, which is urging Iraq to restart oil shipments. As reported by Reuters last month, the administration of former President Donald Trump had pressed Iraq to allow exports to resume immediately, citing the need to enhance global oil supply and help lower prices.
In a recent development, the Iraqi Ministry of Oil sent a letter to Kurdish authorities on Thursday, March 27, 2025, requesting the appointment of an independent consultant. This consultant would be tasked with assessing the cost of production and transportation from each oil field to establish pricing. However, the lack of a clear agreement has raised concerns among oil companies regarding the potential changes in payment terms.
One source indicated that, "an agreement has not been reached until now, and that the cause of the fear is that the companies will not receive in return what they are getting, because the international company may change the terms of payment completely." This uncertainty has left many in the industry anxious about future operations.
The Association of the Petroleum Industry of Kurdistan, which represents over 30 oil companies operating in the region, has made it clear that it will not resume exports until Baghdad commits to honoring existing contracts and provides guarantees for payments relating to both past and future shipments. Notable companies involved in oil production in Iraqi Kurdistan include D.N.O, Genel Energy, Gulf Keystone Petroleum, and Shamaran Petroleum.
Washington's concerns extend beyond just the economic implications of suspended oil flows. The U.S. government is also keen on severing financial ties between Iraq and Iran, aiming to exert pressure on Tehran regarding its oil exports and nuclear program. Iraq plays a crucial role as a key ally for both the United States and Iran, and it has been instrumental in supporting Tehran's economy amid international sanctions.
As negotiations continue, Baghdad appears wary of the political ramifications of its decisions, especially in relation to U.S. foreign policy. Sources have indicated that there are fears in Baghdad that it may inadvertently undermine the U.S. president's strategy of applying pressure on Iran.
In the broader context, Iraq is also planning to increase its oil production to 6 million barrels per day by 2029. Achieving this ambitious target will necessitate partnerships that extend across all provinces of the country. The first phase of this initiative is expected to involve the production of 3 million barrels of oil.
The ongoing negotiations and the complexities surrounding them underscore the delicate balance Iraq must maintain in navigating its relationships with both the United States and Iran. As the situation develops, the eyes of the global oil market remain fixed on the region, eager to see how these discussions will unfold and what impact they will have on oil prices worldwide.
Despite the challenges, the Kurdistan Region's oil sector remains a vital component of Iraq's economy and a significant player in the global oil market. The outcome of these negotiations could have far-reaching implications, not only for Iraq and its Kurdish region but also for international energy markets and geopolitical dynamics in the Middle East.
