Restart of Kurdistan’s Oil Export Isn’t Imminent
Despite Baghdad’s assurances that oil exports from Kurdistan will resume immediately after more than two years, the semi-autonomous Iraqi region isn’t prepared to restart exports, sources familiar with the matter told Reuters on Friday.
Amid drone attacks on oilfields in Kurdistan this week, which have shut in about 200,000 barrels per day (bpd) in production, the federal Iraqi government said on Thursday that the Kurdistan Regional Government (KRG) would immediately begin delivering at least 230,000 bpd to Iraq’s state oil marketing firm SOMO for export. The exports would be carried out under a new agreement approved by the federal cabinet, Baghdad said on Thursday.
However, a source close to APIKUR, the association of companies active in Kurdistan, told Reuters that the restart of exports depends on the receipt of written agreements.
Another source at the company operating the pipeline via Turkey to the Mediterranean coast of Ceyhan, KAR Group, told Reuters that there haven’t been any preparations for an imminent resumption of exports.
The federal government in Baghdad and the regional Kurdish government in Erbil have been squabbling for more than two years over who should be responsible for the oil exports and the subsequent revenue distribution.
The federal authorities say Baghdad should have sole discretion in handling oil exports and oil revenues.
Oil exports from Kurdistan have now been halted nearly two and a half years after they were shut in in March 2023 due to a dispute over who should authorize the Kurdish exports. Despite some breakthroughs in negotiations in recent months, the disagreements apparently continue, and Kurdistan’s oil exports continue to be shut in.
Before the halt to exports, oil supply from Kurdistan averaged more than 400,000 bpd.
The issue with the resumption of exports was raised again this week after foreign companies operating some oilfields in the semi-autonomous region were forced to halt output following attacks with explosive-laden drones on infrastructure at the fields.
By Tsvetana Paraskova for Oilprice.com
Drone Attacks Disrupt Kurdish Output but Tariff Fears Cap Market Reaction
Oil prices were ticking up slightly but largely flat in Asian trading Friday as supply losses from Iraqi pipeline disruptions were offset by renewed demand concerns tied to U.S. tariff threats against key Asian economies. Brent crude edged up to $69.78 and WTI was trading at $67.75 at 2.25 a.m. ET, with both benchmarks holding narrow gains despite broader market uncertainty.
Multiple drone strikes near oil infrastructure in Iraqi Kurdistan this week forced the suspension of production at several fields. The attacks disrupted operations and prompted a temporary halt in output. No group has claimed responsibility, but the incidents mark the most serious disruption in the region since April.
The latest strikes have shut in at least 150,000 barrels per day of oil production across multiple sites, with some estimates nearing 200,000 bpd of shut-ins. The fields are operated by international consortia under contract with the Kurdistan Regional Government (KRG).
Energy officials in Kurdistan told Reuters that the region's output stood at approximately 285,000?bpd before production was slashed by up to 150,000?bpd due to the attacks, cutting output nearly in half
Tariff warfare, however, appears to be in the driver's seat with respect to oil markets this week, overtaking fears of supply shut-ins in Iraqi Kurdistan. Growing fears of a tariff escalation between the U.S. and multiple Asian exporters have added pressure to fuel demand forecasts.
With global growth already showing signs of slowing, the possibility of another round of tit-for-tat trade measures has weighed more heavily on oil sentiment than localized supply shocks. Reuters cited analysts on Friday as saying that the muted price response to the Kurdistan outages suggests markets are increasingly discounting temporary disruptions unless they escalate or coincide with broader geopolitical risk.
By Charles Kennedy for Oilprice.com
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