The Kurdistan Regional Government has proposed to Baghdad an immediate ceasefire after more than a week of fighting following a decision by Baghdad to retake control of disputed Kirkuk and the oil fields around it. The decision was triggered by Kurdistan's insistence to implement the results of an independence referendum that took place at the end of September.
In the course of the clashes these last few days, Iraqi forces along with Iran-backed militias retook both Kirkuk and a number of oil fields around the city. Exports of crude from Kurdistan fell by more than half, to 200,000-250,000 bpd from 600,000 bpd.
What's more, Baghdad built a new crude oil loading point on its southern coast to offset the loss of exports via the Kurdistan-Ceyhan pipeline, which probably contributed to Erbil's decision to propose a ceasefire. Additionally, there has been talk between Iraq and Turkey about restarting a decades-old oil pipeline that bypasses Kurdistan on its way to Turkey.
Meanwhile, yesterday Kurdish sources reported that Iraqi paramilitary forces had attacked Kurdish troops near one border crossing with Turkey and also in close proximity to the notorious oil pipeline on which Kurdistan's livelihood depends.
The offensive was likely part of the strategy employed by PM Haider al-Abadi for the retake of all disputed territories in northern Iraq and for a takeover of the oil pipeline. The PM also aims for complete central-government control of the border crossings to Turkey, which are all inside the Kurdistan Autonomous Region. Related: Which Of These 3 Hotspots Will Be The Next Big Thing In Oil?
In this context, Erbil's decision to call it quits is hardly surprising. The autonomous region has won nothing from its referendum, and is now ready to freeze its results in a bid to cut its losses so far.
"As Iraq and Kurdistan are faced with grave and dangerous circumstances, we are all obliged to act responsibly in order to prevent further violence and clashes. Certainly, continued fighting does not lead any side to victory, but it will drive the country towards disarray and chaos, affecting all aspects of life," the region's government said in a statement.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More