The Kurdistan Region of Iraq is scheduled to resume oil exports this week in the wake of an agreement with Baghdad. This is important because oil exports are important for the stability of the Kurdistan autonomous region and this in turn aids stability in areas around the Kurdish region, such as Syria and the Iranian border and parts of Iraq.
Earlier in the day on Tuesday, the Prime Minister of the Kurdistan region Masrour Barzani said he was on his way to Baghdad to finalize an agreement with the Iraqi government. The Kurdistan region is autonomous and has reserves of oil. However, its independent export of oil has been a source of controversy with Baghdad. This is because of budget discussions and also Baghdad’s desire to rein in the Kurdish region.
Baghdad has claimed that the Kurdistan region began exporting independently in 2014 when ISIS cut Erbil, the capital of the Kurdistan region, off from Baghdad, and Baghdad claims that Erbil was pushed into unfavorable contracts on the export of energy. These exports made Erbil more independent. However, they also made it rely on Turkey for exports.
Baghdad has cut Erbil’s budget over the years. In addition, a controversy over a 2017 Kurdistan independence referendum led to further tensions. Iran has a large amount of influence in Baghdad, meaning that the discussions between Baghdad and Erbil are overshadowed by Iran and Turkey.
It’s worth noting that both Iran and Turkey work closely with Russia. In addition, Iraq has hosted talks between Iran and Saudi Arabia and those talks led to normalization, brokered by China earlier this month. Saudi Arabia and Gulf oil exporters also recently announced cuts to production. What this means is that oil prices may be going up. This means the Kurdistan region could benefit from higher prices.
According to a tweet from Masrour Barzani, “The new deal is temporary. However, It's a crucial step towards ending the long-standing dispute between Erbil and Baghdad, and it creates a positive and safe atmosphere to finally approve the national oil and gas law.” Rudaw media in Erbil reported that “Prime Minister of the Kurdistan Region Masrour Barzani and Iraqi Prime Minister Mohammed Shia’ al-Sudani on Tuesday signed an agreement to resume the Region’s oil exports, calling the deal ‘important’ for all components of the Iraqi state.”
The Barzani delegation met with the Iraqi oil minister while in Baghdad.
Analysis: Will Erbil's oil exports continue without interruption?
The major question now is whether the agreement will become temporary and whether Erbil’s oil exports will continue without interruption and lead to more stability for the region. Payment of consistent salaries and also payments for the Kurdistan Region’s security forces, the Peshmerga, are important. In addition, the US-led coalition has personnel in Erbil and the US is building a large new consulate in Erbil. As such, there are many issues that intersect in the Kurdistan region.
Oil and energy issues are one of the main issues that come into play in Erbil-Baghdad politics. Keeping the oil flowing and increasing consistent ties between Erbil and Baghdad are key issues for the region. This is even more true in light of the diplomatic phase taking place in the Middle East as Saudi Arabia and Iran have normalized ties.