Iraq has been largely cut off from the world’s oil market due to the Iran war. This is a major problem for Baghdad because the country relies on oil exports. Iraq’s economy is also always teetering on the brink of disaster due to various other challenges, such as the presence of Iran-backed militias.
Therefore, it was imperative for Baghdad to find another way to export oil. And there is one obvious solution: the autonomous Kurdistan region of Iraq, which exports oil and has a pipeline that goes to Turkey.
Baghdad wants to move oil via the Kurdistan region to Turkey, but the Kurdistan region wants Baghdad to end the trade embargo Baghdad has placed upon it. All of this is very complex, but it boils down to Baghdad seeking to weaken and punish the Kurdistan region. In the same vein, Baghdad wants to exploit the region when it needs things, like oil exports.
Now, it appears that a deal has been reached. The oil will flow. US Ambassador to Turkey, Tom Barrack, wrote yesterday on X/Twitter: “Many thanks to Erbil and Baghdad for their work to reach [an] agreement at this critical time to resume energy exports and improve prosperity for the region. Your courage, steadfast cooperation, and commitment to the diplomatic path have been truly invaluable. The United States remains fully committed to supporting these important efforts in this time of crisis.”
Meanwhile, Prime Minister of the Kurdistan region, Masrour Barzani, wrote: “Given the extraordinary circumstances facing the country, and the responsibility we all share to get through this difficult chapter, we have decided to allow oil to flow through the Kurdistan region’s pipeline as soon as possible.”
Barzani also noted, “I spoke with the US Ambassador to Turkey on the ongoing Erbil–Baghdad talks. On oil, I made clear that the Kurdistan region will allow the federal government to resume exports via our pipeline. On the trade embargo, I urged our US partners to continue supporting the negotiations as observers.”
Barrack has less diplomatic power with Iran war
Barrack is a key diplomat and problem-solver for the US in the region. He has been working as envoy to Syria throughout the last year. He is also playing a role in Iraq. With the war in Iran ongoing, Barrack has had less to do in terms of diplomacy. This is because, when a war occurs, diplomacy takes a back seat.
However, to win a war, one must secure a route for peace as well. Barrack is helping to pave the way to what may come next in Iraq and Syria, as well as the key Kurdistan region. This is a region that is a close US partner. It helped defeat ISIS. It hosts a large US consulate that has been under attack by Iranian-backed militias in Iraq. It also hosts US forces. As such, it is important for the region’s geopolitics that the oil deals benefit everyone.
What is the local media saying? Rudaw, in Erbil, the capital of the Kurdistan Regional Government in Iraq, noted that Iraq’s oil ministry said on Tuesday that it is in talks with Iran to allow its oil tankers to pass through the Strait of Hormuz as the country scrambles to find alternative routes amid Tehran’s chokehold on the route.
Rudaw reported: “Kurdistan Region Prime Minister Masrour Barzani held a call on Tuesday with Tom Barrack, the US president’s special envoy, to discuss regional developments and the recent agreement between Erbil and Baghdad allowing Iraqi oil exports via the Kurdistan Region’s pipeline to Turkey, according to a statement from the Kurdistan Regional Government (KRG).”
It went on to say, “Erbil and Baghdad have reached a key agreement to resume Iraqi oil exports via the Kurdistan Region's pipeline to Turkey, a Kurdish lawmaker in the Iraqi parliament told Rudaw on Tuesday.”
Iraqi Oil Minister Hayyan Abdul Ghani told Rudaw that the agreement will take effect on Wednesday.
Rudaw also said, “Iraq’s oil exports have decreased to unprecedented levels amid the closure of the Strait of Hormuz due to regional conflict between the US and Israel on the one side and Iran on the other, Nabil al-Marsoumi, an economic expert, told Rudaw in an interview on Tuesday.”
Iraq is trying to get Iran to allow its oil tankers to pass the Strait of Hormuz. It appears some other tankers have been allowed to pass as long as they sail close to Iran's shores.
“Currently, following the suspension of Iraqi oil exports through the Strait of Hormuz - which used to reach nearly 3.2 million barrels per day - and after foreign companies left the Kurdistan Region’s oil fields due to the war, causing production to halt, Iraq is only exporting 10,000 barrels of oil daily via tankers to Jordan,” Marsoumi said, according to Rudaw.