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The autonomous Iraqi region of Kurdistan exported over 37 million barrels of crude oil over the three months to June this year, making $3.8 billion from the sales, local media reported.
Kurdistan has been exporting its oil independently of the central Iraqi government in Baghdad, but the latter appears to have grown unhappy with this state of affairs. Earlier this month, an official from the Iraqi oil ministry said that the government had advised international oil buyers not to do business with the Kurdish government.
The announcement followed an Iraqi Supreme Court ruling against a Kurdish law on oil and gas which was passed back in 2007. The government in Baghdad never recognized the law, which makes Kurdish exports of oil illegal from its perspective. According to Baghdad, Erbil is obliged to comply with the Supreme Court’s decision.
Iraq is OPEC’s second-largest producer of oil but political instability has plagued the country for years, interfering with its production growth plans. Tensions between Baghdad and Erbil have contributed to the instability.
A recent escalation of social unrest that led to violent clashes with protesters was the latest red flag, which prompted one analyst—RBC’s Helima Croft—to suggest Iraq could lose up to a million barrels daily in production if the escalation went further.
That was in late August when a prominent Iraqi Shia cleric said he would quit politics. Since then, things have quieted down but there are still ongoing protests in different parts of the country.
Meanwhile, the U.S. has urged Baghdad and Erbil to get together and discuss their oil and gas issues.
“The solution must come from the Iraqi fronts. It is not possible for the United States or any outside force to impose its opinions or impose a solution on the Iraqi people,” a State Department spokesman told Rudaw on the sidelines of the UN General Assembly that took place last week.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com