After a two-and-a-half-year halt, Iraq's semi-autonomous
Kurdistan region has resumed oil exports to Türkiye, with flows currently
running between 180,000 and 190,000 barrels per day (bpd). This restart,
enabled by an interim agreement among Iraq’s Federal Government, the Kurdistan
Regional Government (KRG), and international oil companies, marks a critical
economic development with broad regional and geopolitical implications.
Restarting Kurdish Oil Exports
As reported by Rudaw journalist Shivan Ibrahim, Iraq's Oil
Ministry confirmed on 27 September 2025 that crude oil began flowing through
the pipeline from the Kurdistan Region to Türkiye’s Mediterranean port of
Ceyhan after more than two-and-a-half years of dormancy. According to the
ministry, operations commenced smoothly at 6 AM local time without any
technical difficulties.
The pipeline, known as the Iraq and Turkey Pipeline (ITP), was
closed in March 2023 following a ruling by the International Chamber of
Commerce (ICC), which mandated Türkiye to pay $1.5 billion in damages to Iraq
for unauthorised Kurdish oil exports between 2014 and 2018. The closure
severely impacted the Kurdistan Region’s oil revenues and strained relations
among stakeholders.
Agreement Details and Export Volumes
The interim deal involves Iraq’s Federal Government, the
KRG, and eight major international oil companies that produce more than 90% of
Kurdish crude. Under the arrangement, the KRG will supply crude to Iraq’s State
Oil Marketing Organisation (SOMO), which manages oil sales via an independent
trader stationed at Ceyhan port.
According to Hayyan Abdulghani, Iraq’s Oil Minister, the
arrangement allows for transporting 180,000 to 190,000 bpd initially, with
plans to increase this volume to 230,000 bpd. Of this total, 50,000 bpd is
reserved for local consumption within the Kurdistan region, while the rest is
earmarked for export.
This volume marks a significant resumption compared to the
zero flow during the shutdown and represents about half of the pipeline’s
capacity before the closure, which previously carried between 400,000 and
450,000 bpd of medium sour Kirkuk crude.
Financial and Contractual Arrangements
The deal includes a pricing mechanism whereby the KRG will
pay the oil companies $16 per barrel sold through the pipeline, more than
double the previous $6 per barrel under the 2024 federal budget law. This
adjustment reflects the need to incentivise production and resolve outstanding
debts owed by the KRG to producers. Discussions to settle these financial
obligations and deepen cooperation are scheduled within 30 days of the
pipeline’s restart.
The resumption of oil flows and revised financial
arrangements come after nearly two years of difficult negotiations between
Erbil and Baghdad, with international diplomatic mediation from the United States. U.S. officials, including Secretary of State Marco Rubio, have voiced
support for the agreement, citing its potential to bring “tangible benefits for
both Türkiye and Iraq” and contribute to global energy market stability.
Economic Impact on Kurdistan Region
The Kurdistan Region’s economy relies heavily on oil
revenues to fund public sector salaries and essential services. The pipeline
shutdown caused severe fiscal strain, with salary delays and service cuts
reported. The resumption of exports is expected to alleviate these economic
pressures significantly. As stated by KRG energy officials in Asharq Al-Awsat,
the current flow levels align with production capabilities and regional market
demands.
Moreover, the deal is projected to increase Iraq’s total oil
exports from approximately 3.4 million barrels per day to 3.6 million bpd,
easing fiscal pressures at the federal level as well.
Infrastructure and Production Recovery
The Kurdistan Regional Government has been working to
restore production capacity that declined sharply after the pipeline’s
suspension. Northern oil fields, including some hit by drone attacks earlier in
the year, have gradually recovered. Production averaged close to 300,000 bpd in
2024, down from about 435,000 bpd in 2022.
While some crude was sold locally at steep discounts or
transported via trucks to Iraq and Iran, the resumption of pipeline exports
represents the most efficient and profitable outlet. However, volumes are
unlikely to return to pre-shutdown levels in the near term due to lingering
operational and security challenges.
Geopolitical and Regional Implications
Control over crude oil exports has long been a contentious
issue between the Iraqi federal government in Baghdad and the KRG in Erbil,
with disputes centering on authority, production rights, and revenue sharing.
The pipeline restart under a tripartite agreement signals a partial thaw in
these tensions, though underlying political disagreements remain unresolved.
Kurdish oil exports via Türkiye are also geopolitically
sensitive given Türkiye’s balancing act between supporting Kurds domestically
and regionally and managing economic ties with Baghdad. The deal reaffirms
Türkiye’s role as a critical energy transit hub linking Middle Eastern oil
producers to international markets.
Energy analysts note that the arrangement diversifies
Türkiye’s crude sources, thus contributing to its energy security strategy amid
broader regional instability.
Market and Global Energy Context
The timing of the resumption coincides with growing oil
market uncertainties and production adjustments led by the Organisation of the
Petroleum Exporting Countries (OPEC). Iraq's increased exports from northern
fields complement ongoing production efforts in Basra and other southern
locations.
Global oil prices reacted to the news with mild slippage, as
increased supply from Kurdistan and plans for additional OPEC output hikes in
November signal potential growth in market availability. The restart also
aligns with U.S. strategic interests aiming to stabilize crude prices and
reduce reliance on other volatile suppliers.
Statements from Officials and Experts
Hayyan Abdulghani, Iraq’s Oil Minister, expressed optimism about the deal:
“The restart of flows through the Kirkuk-Ceyhan pipeline is a vital step for Iraq’s oil industry and economic recovery. Our priority is to maintain operational stability and expand export capacity responsibly.”
A KRG energy ministry representative told Asharq Al-Awsat:
“Our current exports meet market needs while respecting production limits. The agreement enables better cooperation with Baghdad and international firms, which is essential for future growth.”
Turkish Minister of Energy Allan Bayaktar confirmed on social media platform X:
“Türkiye welcomes the resumption of Kurdish oil shipments, reinforcing our strategic energy partnership.”
U.S. Secretary of State Marco Rubio highlighted the deal's broader significance:
“This agreement is a win-win for all parties, promoting regional stability and contributing positively to global energy markets.”.