Oil Tensions Mount As Iraq Contradicts Turkey's Export Claims

While Turkey said on Monday that Iraqi oil exports would resume this week through a stalled oil pipeline, Iraq is saying that negotiations are still ongoing, an anonymous Iraqi official told Reuters on Tuesday. 

“We have further meetings soon and things will be more clear on how serious is Turkey to show some flexibility,” the source said, implying that the negotiations were far from complete, and that Iraq expected more movement from Turkey before oil flows could resume. 

The International Chamber of Commerce (ICC) suspended oil flows from Iraq to Turkey in March, ordering Turkey to pay the Iraqi government $1.5 billion in compensation for what it determined were unauthorized oil exports by the Kurdistan Regional Government (KRG) between 2014 and 2018 via the Iraq-Turkey pipeline and the port of Ceyhan. But the deal between Turkey, Baghdad, and the KRG remains incomplete.

The stalemate between Iraq’s state-run oil marketing company, the Kurdistan Regional Government, and Turkey has managed to disrupt oil flows through a vital pipeline from Iraqi Kurdistan through Turkey since March 25. Talks between the parties have dragged on for months, with 400,000 barrels of oil per day no longer flowing through the pipeline.

In May, Iraq’s oil minister said that Baghdad and Erbil were set to reach an agreement over crude oil exports from the Kurdistan region within a “maximum of two weeks.” Instead, even five months has turned out to be an underestimation of the time it would take the parties to come to an agreement. In the meantime, the KRG has lost out on billions in oil revenues.

Iraq, OPEC’s second-largest producer after Saudi Arabia, is currently exporting oil only via its southern oil export terminals.

By Julianne Geiger for Oilprice.com

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