Iraq's federal government and officials from the semi-autonomous Kurdish region on Tuesday reached an agreement to restart oil exports from northern Iraq via a pipeline to Türkiye, officials said.
Iraqi Prime Minister Mohammed Shia Al Sudani and Masrour Barzani, prime minister of the Kurdistan Regional Government (KRG), announced the deal at a news conference in Baghdad.
"Halting the export of the region's oil harms Iraq's revenues," Sudani said, adding that the governments would work toward passing a federal law detailing the sharing of funds from oil and gas exports.
In a statement, Barzani said while the deal is temporary, it is a "crucial step toward ending the long-standing dispute" between Irbil and Baghdad and "creates a positive and safe atmosphere to finally approve the national oil and gas law."
KRG officials said the deal would allow exports to begin again as early as Tuesday.
A formal request has been sent to Türkiye to restart oil flows through an Iraq-Türkiye pipeline and "pumping will resume in the next few hours," a Baghdad government official told Reuters.
Türkiye stopped pumping about 450,000 barrels per day (bpd) of Iraqi crude from the pipeline last month after the International Chamber of Commerce (ICC) ordered Baghdad and Ankara to pay each other compensation on a long-standing arbitration case.
The case relates to Iraq's claim that Türkiye violated a joint agreement by allowing the KRG to export oil through the pipeline to the Mediterranean port of Ceyhan without its consent.
Ankara said the ICC had recognized most of Türkiye's demands. Its Energy Ministry said the chamber ordered Iraq to compensate Türkiye for several violations concerning the case.
The halted flows only account for about 0.5% of the global oil supply. Still, the stoppage, which forced oil firms operating in the region to halt output or move production into rapidly filling storage tanks, helped boost oil prices back to nearly $80 a barrel last week.
The latest deal comes two days after Iraq, Saudi Arabia and several other major oil exporters announced a sharp reduction in their production from May that sent up oil prices.
Baghdad and Irbil have been at loggerheads over oil revenues for years.
Barzani was also set to hold talks with Sudani to settle a separate dispute over oil and gas that has dragged on for nearly two decades.
Iraq, the Organization of the Petroleum Exporting Countries' (OPEC) second-largest producer, filed for arbitration against Türkiye in 2014 after the KRG sidelined the state-owned oil marketing company, SOMO, and began exporting crude oil through the neighboring country.
Iraq claimed that all oil exports have to go through SOMO, as per a 1973 agreement with Türkiye.
Under the new deal, which was finalized late on Monday, SOMO will have the authority to market and export KRG oil, and the revenues will be deposited in an account at the Iraqi Central Bank under the control of the KRG, two Iraqi government officials noted.
Both spoke on condition of anonymity as they were not authorized to speak to the media.
Baghdad will have access to account audits.
A joint committee formed by the federal and regional governments will supervise the export process, officials said.
Iraq's economy is one of the most oil-dependent in the world, according to the World Bank. While most of the country's oil reserves are located in the south, the KRG is heavily reliant on exports of the resource from northern fields.