Baghdad and the Kurdistan Regional Government have reached a deal to resume crude oil shipments to Turkey’s Ceyhan port starting Wednesday morning. The agreement comes as Iraq faces a 70% drop in oil production from its main southern fields due to the Iran conflict shutting down the Strait of Hormuz.
Baghdad and Kurdistan Regional Government officials announced Tuesday they have struck a deal to restart crude oil shipments to Turkey’s Ceyhan energy terminal, with flows set to begin Wednesday morning.
Iraqi Oil Minister Hayan Abdel-Ghani told state media that petroleum exports would commence at 10 a.m. local time Wednesday through the regional pipeline system.
Kurdistan authorities confirmed the arrangement in an official statement, explaining that both governments will establish a joint oversight committee to coordinate the export restart. All revenues generated will flow back to Iraq’s federal treasury, according to the agreement.
The deal also includes provisions for enhanced security measures to safeguard oil production facilities and maintain uninterrupted export operations, Kurdish officials said.
Kurdistan Regional Government Prime Minister Masrour Barzani announced on social media that the region would permit crude shipments through its pipeline infrastructure as soon as possible “in light of the exceptional circumstances the country is confronting.”
“Discussions with Baghdad will continue to urgently lift restrictions on imports and trade to the region, and to provide the necessary guarantees to oil and gas companies to ensure they can resume production in a safe environment,” Barzani stated.
In a subsequent social media post, Barzani revealed that during a telephone conversation with U.S. envoy Tom Barrack, he had directed his team to provide full support for restarting oil exports to benefit citizens during these challenging times.
The breakthrough follows recent tensions between the two governments. Kurdish leadership claimed Sunday that Baghdad had not adequately addressed security and economic issues affecting the petroleum sector, pushing back against allegations that they were blocking pipeline access.
Those comments came after Iraq’s oil ministry accused Kurdish authorities of implementing unreasonable conditions and refusing pipeline access for alternative crude transport routes disrupted by the Iran conflict.
Earlier Tuesday, Iraq’s presidency called on both the federal government and Kurdish region to work together on resuming petroleum exports.
Parliament also weighed in Wednesday with a seven-point resolution during a special session focused on Ceyhan pipeline exports, urging the federal government to secure alternative outlets for Iraqi crude to prevent economic harm amid current security challenges.
The parliamentary measures appeared designed to strengthen Baghdad’s oversight of the nation’s oil industry and followed a late Tuesday meeting with the oil minister to evaluate the impact of halted exports after Strait of Hormuz closure.
Lawmakers said they stood ready to approve any necessary steps to support export efforts and called on the federal government to assert authority over all petroleum production, transportation and distribution activities.
Parliament also recommended supplying fuel oil to government and private industrial facilities to prevent refinery inventory buildup, and rehabilitating the Iraqi pipeline route from Kirkuk through western Mosul, Zummar and Fishkhabour to Ceyhan.
Oil production from Iraq’s primary southern fields, which generate most of the country’s crude output and exports, has dropped 70% to just 1.3 million barrels daily, sources reported March 8. The decline stems from the Iran conflict effectively closing the critical Strait of Hormuz, through which approximately 20% of global oil supplies pass.
In early March, Iraq’s oil ministry requested Kurdish authorities allow at least 100,000 barrels per day of Kirkuk crude to flow through the Kurdistan pipeline network to Turkey’s Ceyhan terminal, according to two oil officials.
Kurdish officials say relations with Baghdad have deteriorated after the federal government implemented a new electronic customs monitoring system, allowing oversight of imports and revenue streams. The Kurdistan Regional Government views this as an attack on its autonomous authority and trade control.