U.S. Ultimatum Forced Iraq To Rekindle Kurdish Oil Exports

U.S. Ultimatum Forced Iraq To Rekindle Kurdish Oil Exports | OilPrice.com

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Breaking News:

ByJulianne Geiger– Feb 21, 2025, 11:30 AM CST

The U.S. has pressured Iraq to restart Kurdish oil exports via Turkey–and that pressure appears to be successful.

The United States issued an ultimatum to Iraq, anonymous sources disclosed to Reuters on Friday. The ultimatum was simple: restart Kurdish oil exports through the shuttered pipeline–or else suffer the same fate as Iran with regards to US sanctions.

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On Monday, Iraq’s oil minister said that oil flows from the semi-autonomous Kurdistan region would resume next week in what would be a rather abrupt end to a two-year stalemate over oil shipments. Officials from the Iraqi Ministry of Oil were expected to be in Erbil on Tuesday to finalize the details regarding oil exports.

Kurdistan’s oil pipeline to Turkey has been shut since 2023 due to a dispute about oil revenues and who’s in charge of the oil. Years of failed negotiations have kept the oil from flowing.

While Iraq’s oil minister has announced an imminent restart, unresolved payment and technical issues remain. Kurdish producers like DNO (DNO.OL) are seeking guarantees before resuming shipments, particularly on recovering outstanding dues. Meanwhile, Turkey is still awaiting confirmation from Iraq before reopening the pipeline.

The restart could raise OPEC+ compliance questions, as Iraq is under quota pressure. However, analysts suggest it may simply shift Kurdish oil from smuggling routes to legal exports rather than adding fresh supply. With ongoing disruptions elsewhere, such as Kazakhstan’s reduced flows due to Ukrainian drone strikes, any added barrels could help to fulfill one of Trump’s key energy priorities–plentiful supply and lower prices.

Iraq is OPEC’s second-largest oil producer after Saudi Arabia, with a fair chunk of its oil hailing from the oilfields in the northern Kurdistan region.

By Julianne Geiger for Oilprice.com

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