Iraq Resumes Kurdistan Oil Exports After Halt of Two Years

(Bloomberg) -- Iraq resumed oil exports from its northern region Saturday after a more than two-year halt, adding supply to a global market that’s widely expected to move into a heavy surplus.

Oil export operations began at 6 a.m. local time Saturday “at a high pace and with complete fluidity, without any notable technical problems,” Iraq’s oil ministry said in a statement.

The restart will initially boost international supply by as much as 190,000 barrels a day, according to Iraq Oil Minister Hayyan Abdul Ghani. The global oil market is widely expected to be heading for a glut, with the International Energy Agency forecasting record oversupply next year as OPEC continues to increase production.

The saga with the pipeline goes back to March 2023 when Turkey halted the link following an arbitration court’s order to pay Iraq $1.5 billion in compensation. Various attempts to restart had failed because of financial and legal disagreements between the federal and regional governments, and the oil companies involved. The halt has resulted in at least $22 billion of lost revenue for Iraq, according to the country’s foreign minister.

Footage of workers opening the valves at the oil fields in Kurdistan, with staff and officials cheering, were livestreamed on Kurdish TV on Saturday.

US Secretary of State Marco Rubio said earlier that the agreement will “encourage a more stable investment environment throughout Iraq for US companies.” 

Eight international firms that together account for more than 90% of the Kurdistan region’s production had earlier agreed to the export deal. Norway’s DNO ASA, which operates the Tawke license, held out, saying it wanted “agreements that ensure payment surety for both past arrears and future exports.” 

The company said earlier this week it will deliver the government’s share of production from its fields to the state for exports, but will continue to sell its own share to local Kurdish buyers at a “price in the low $30s.” Other firms participating in the export deals will get a price of $14 a barrel for their oil, after deducting transportation costs, DNO said in a Sept. 26 statement.

The export compensation will be “adjusted in 2026 based on an evaluation of commercial models and contracts by a Baghdad-designated consultant,” DNO said.

Iraq and Kurdistan had long been in dispute over control of oil revenue from the north, but earlier this year the regional government agreed to hand over control of its crude to Iraq’s state marketer for onward sales. That had paved the way for the federal government to release funds to the regional administration for employees’ salaries.           

Iraq, the second-largest OPEC producer, has been pumping about 4.2 million barrels a day on average this year and sends most of its exports via the port of Basrah in the country’s south to buyers in Asia. The additional shipments from the north would add to concerns of supply excess.

The Organization of Petroleum Exporting Countries and its partners agreed earlier this month to press on with returning supply that they’ve been withholding, giving some members room to raise overseas sales. Iraq will be able to pump 4.237 million barrels a day in October, according to a statement on OPEC’s website.

Global benchmark Brent crude has declined about 7% this year in anticipation of the approaching oversupply. Still, geopolitical tensions and US President Donald Trump’s pressure on buyers of Russian oil have prevented a steeper decline.

--With assistance from Verity Ratcliffe.

(Updates with Iraq oil ministry statement in second paragraph.)

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