What is the story about?
What's Happening?
Crude oil flows from Iraq's northern Kurdistan region to Turkey have resumed after a two-and-a-half-year halt. The pipeline was shut down following an International Chamber of Commerce ruling that ordered Turkey to pay Iraq $1.5 billion in damages for unauthorized oil exports from Iraqi Kurdistan between 2014 and 2018. The resumption of oil exports is expected to add 180,000 to 190,000 barrels per day, potentially increasing to 230,000 barrels per day. This move aligns with efforts by OPEC+ countries to increase output and gain market share. The U.S. government had advocated for the restart to help ease crude prices.
Why It's Important?
The resumption of oil exports through the Iraq-Turkey pipeline is significant for the global oil market, particularly as Iraq is OPEC's second-largest oil producer. The increased supply could help stabilize crude prices, which is a priority for the U.S. government. For the Kurdistan region, this development alleviates economic strain, addressing salary delays for public sector workers and cuts to essential services. The move also reflects broader geopolitical dynamics, including the U.S. strategy to reduce Iran's crude exports.
What's Next?
Eight oil companies operating in Iraqi Kurdistan have reached agreements with Baghdad and the Kurdistan Regional Government to resume exports. The crude will be delivered to SOMO, Iraq's national oil marketing company, and sold by an independent trader using SOMO's official prices. Producers will receive $16 per barrel. The resumption is expected to ease economic pressures in the Kurdistan region and contribute to global oil supply dynamics.
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