Iraq is waiting for Türkiye's approval to restart the oil flows from the Kurdistan Regional Government (KRG) in northern Iraq, the Iraqi Oil Minister Hayan Abdel-Ghani said on Monday, adding that crude exports will hopefully be ready in two days.
Iraqi officials have said all procedures had been completed to allow the resumption of flows from the KRG to Türkiye via a pipeline linked to the port of Ceyhan on its Mediterranean coast.
The restart would resolve a nearly two-year dispute that has disrupted crude flows as ties between Baghdad and Irbil improve.
Basim Mohammed, deputy Iraqi oil minister for upstream operations, said on Sunday Iraq had reached out to Türkiye to confirm the readiness of the export pipeline and is expecting a response within 24 hours.
A resumption is expected to ease economic pressure in the KRG, where the halt has led to salary delays for public sector workers and cuts to essential services.
Iraq's KRG authorities have agreed with the federal oil ministry to restart flows based on available volumes, the regional government said on Sunday.
Once the oil shipments resume, Iraq will export 185,000 barrels per day (bpd) from KRG oilfields through the Iraq-Türkiye pipeline, Mohammed told Iraq's state news agency.
The quantity currently available for export from KRG oilfields is 300,000 bpd, part of which is allocated for domestic use, while the remaining 185,000 barrels will be designated for export, he noted.
Flows go through a KRG pipeline to Fish-Khabur on the northern Iraqi border, where the oil enters Türkiye and is pumped to the port of Ceyhan.
The exports were halted by Türkiye in March 2023 following an arbitration ruling by the International Chamber of Commerce (ICC).
The ICC ordered Ankara to pay Baghdad damages of $1.5 billion over what it said were unauthorized exports by the KRG between 2014 and 2018.
Türkiye, on the other hand, said the body had recognized most of Ankara's demands.
In October 2023, Türkiye said the pipeline was ready for operations and that it was up to Iraq to resume flows.
The federal and regional governments in Iraq have been negotiating ever since over the production and transport costs payable to the region and its commercial partners.
The Association of the Petroleum Industry of Kurdistan, which represents international oil firms operating in the Iraqi region, put losses to all parties since the pipeline closed at $20 billion.
Iraq, the Organization of the Petroleum Exporting Countries' second-largest producer behind de facto leader Saudi Arabia, is currently pumping about 4 million bpd, OPEC data shows, in line with the production target agreed with the broader OPEC+ alliance.
It remains unclear how Iraq will boost its northern exports and stay compliant with OPEC+ cuts and whether it would, for example, trim exports from Basra in southern Iraq.
Asked if resuming KRG oil exports will affect Iraq's OPEC compliance, Abdel-Ghani told reporters that Baghdad is committed to the OPEC+ decisions and exported volumes under the control of the Oil Ministry.
U.S. President Donald Trump's administration is putting pressure on Iraq to allow KRG oil exports to restart or face sanctions alongside Iran, sources have told Reuters. An Iraqi official later denied pressure or the threat of sanctions.
A speedy resumption of exports from the KRG region would help to offset a potential fall in Iranian oil exports, which Washington has pledged to cut to zero as part of Trump's "maximum pressure" campaign against Tehran.
Asked if the exports will include crude oil produced from Iraq's Kirkuk fields, Hayan Abdel-Ghani told reporters: "Production from Kirkuk fields will be for local use."
Meanwhile, oil prices steadied on Monday as investors awaited clarity on talks to end the war in Ukraine and weighed up the prospect of the resumption of crude exports from northern Iraq.
Brent futures were up 13 cents, or 0.2%, at $74.56 per barrel by 11:03 a.m. GMT, while U.S. West Texas Intermediate crude futures added 11 cents, or 0.2%, to $70.51.
Both Brent and WTI dropped by more than $2 on Friday, registering weekly declines of 0.4% and 0.5%, respectively.
All eyes remain on efforts to end Russia's war on Ukraine, which entered its fourth year on Monday.
Ukrainian President Volodymyr Zelenskyy said on Sunday that he was willing to step down if it meant peace for his country.
U.S. President Donald Trump has initiated talks with Russia without inviting Ukraine or the European Union to the table. A senior Russian diplomat said Russian and U.S. teams plan to meet for further discussions this week.
Sanctions imposed by the U.S. and EU on Russian oil exports have disrupted seaborne oil supply flows, but an end to the war in Ukraine would not necessarily increase Russian supplies to the market because the country is a member of the OPEC+ group that has curbed production.
However, oil prices could still drop because of a decrease in geopolitical risk, said Harry Tchilinguiran, head of research at Onyx Capital Group.
Oil prices will be influenced by geopolitical developments and U.S. policy announcements in the short term, said Sugandha Sachdeva, founder of New Delhi research firm SS WealthStreet.
An expected increase in supply from Iraq is also weighing on prices, analysts say, though the timing of the resumption of flows through the Iraq-Türkiye pipeline is still unclear.
"The downward spiral in crude oil prices is driven by pressure from the U.S. president on Iraq to resume oil exports from Kurdistan oilfields, which could improve supply flows in global oil markets after nearly two years of disruption," Sachdeva said.
