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Iraq is poised to resume oil exports through Turkey's Ceyhan port on Wednesday following a deal between the Iraqi government and the Kurdistan Regional Government, Oil Minister Hayyan Abdul Ghani said.
Oil flow from the Ceyhan port will begin at 10am local time, the country's parliament quoted Mr Abdul Ghani as saying.
He gave no more details, but earlier had said that Iraq can pump between 200,000 and 250,000 barrels per day from northern oilfields in Kirkuk and that could be boosted by 200,000 bpd from the Iraqi Kurdistan region.
The move comes after days of negotiations and tensions between Baghdad and the KRG in Erbil over long-running financial disputes.
The resumption of oil exports is seen as a crucial step by Iraq to mitigate the economic impact of the US-Israel war against Iran, which has disrupted oil flows through the Strait of Hormuz.
Iraq's oil production has dropped to about 1.4 million bpd, nearly a third of its total output of about 4.2 million bpd before the war. Exports, which averaged 3.4 million bpd before the war, have been brought to a halt.
The deal is also seen as a result of US pressure to increase oil supplies and reduce surging crude prices. Tom Barrack, US ambassador to Turkey and special envoy to Syria, hailed the agreement between Baghdad and Erbil.
“Many thanks to Erbil and Baghdad for their work to reach agreement at this critical time to resume energy exports and improve prosperity for the region,” Mr Barrack wrote on X.
“Your courage, steadfast co-operation and commitment to the diplomatic path have been truly invaluable.” The US “remains fully committed to supporting these efforts in this time of crisis”, he added.
The KRG had asked Baghdad to lift a customs policy imposed in January before pumping oil. The new system is part of reforms to impose more control on imports and tariffs, and eventually end money laundering and corruption. It also asked Baghdad to buy excess electricity produced in the region.
On Tuesday, Baghdad warned the KRG of legal action over its refusal to allow the pumping of oil through the Kurdistan Export Pipeline. It accused Erbil of breaching the Iraqi constitution.
“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,” Prime Minister Masrour Barzani said.
“In parallel, our discussions with Baghdad will continue with urgency to lift the restrictions on imports and trade into Kurdistan region.”
The KRG also said last week that “outlawed militias” made oil, gas and energy fields “targets of their attacks”, taking production offline and leaving “no oil available for export”. It added that Baghdad has taken “no effective measures” to stop the assaults and claimed “many of the perpetrators … receive salaries and support from Baghdad”.
The discussions with Baghdad will also aim “to secure guarantees for oil and gas companies so they can safely resume production”, Mr Barzani added.
After announcing the deal, oil prices eased, providing modest relief to concerns about Middle East supplies.
After rising more than 3 per cent on Tuesday, Brent, the benchmark for two-thirds of the world's oil, was trading 1.38 per cent lower at $101.99 a barrel at 7.07am UAE time on Wednesday. West Texas Intermediate, the gauge that tracks US crude, was down 1.89 per cent at $94.39 per barrel.
Baghdad is also looking into other options to send oil to the international market. Mr Ghani has said that his country is in contact with Iran to allow some oil tankers to pass through the Strait of Hormuz and is also exploring overland routes. It aims to move between 100,000 bpd and 200,000 bpd through Turkey, Syria and Jordan.
It also is revamping its Kirkuk-Ceyhan pipeline to pump crude to Turkey's Mediterranean port, bypassing the Kurdistan Export Pipeline, he said. The Iraq-Turkey pipeline, a major energy artery connecting the Kurdistan region's oilfields to Turkey, has been largely idle for more than a decade owing to damage caused by ISIS, as well as other armed groups.
