Economically boosting the KRG with resumed oil exports will benefit region - analysis

The resumption of the flow was historic, Kurdistan Regional Government (KRG) Prime Minister Masrour Barzani said Saturday.

The Iraqi Oil Ministry said: “The operations commenced at 6 a.m. at a high pace and complete flow without recording any technical problems worth mentioning, reflecting the success of the joint efforts between the federal government and the regional government in achieving this important accomplishment.”

The oil can now flow to Turkey via a pipeline. The exports were suspended in 2023.

The route to this resumption has been complicated. During the war against ISIS, after the terrorist group took over a swath of Iraq in 2024, oil flowed from the Kurdistan Region to Turkey when Erbil was largely cut off from Baghdad.

As such, the KRG had to fend for itself. Exporting oil to Turkey helped the KRG.

Turkey also invested heavily in the Kurdistan Region. Cash flowed into Dohuk and Erbil as Turkish companies moved in. Turkey had also played a key role in Erbil’s airport reconstruction.

It made sense for Turkey to help transit the oil. However, a Paris arbitration subsequently “found that Ankara had violated a 1973 pipeline agreement with Baghdad by allowing Erbil to independently export oil since 2014,” Rudaw reported.

This came after Baghdad clashed with Erbil over an independence referendum in 2017. Baghdad was trying to weaken Erbil’s autonomy.

The oil is now flowing again. Baghdad considers this to be a step toward managing Iraq’s national wealth.

It’s also important for Turkey, Rudaw reported.

“Turkish Energy Minister Alparslan Bayraktar confirmed the flow of the Kurdish oil to his country at 7:07 a.m. [on Saturday],” the report said. “Mazhar Mohammed Saleh, an adviser to Iraqi Prime Minister Mohammed Shia’ al-Sudani for financial and economic affairs, told Rudaw on Saturday that the resumption of oil exports from the Kurdistan Region would contribute approximately $400 million-$500m. monthly to the country's federal budget.”

The US has also backed the resumption of oil exports and the recent deal to see it flow. The KRG has sought to work with the Trump administration.

“On Monday, May 19, 2025, Prime Minister Masrour Barzani of the Kurdistan Regional Government (KRG) presided over a high-level ceremony at the United States Chamber of Commerce in Washington D.C., where two major energy agreements were signed to expand the Kurdistan Region’s energy infrastructure and unlock long-term investment opportunities across both the Kurdistan Region and Iraq,” the KRG said in May.

Eight oil companies, representing about 90% of production in the KRG, have signed on to the new deal, Reuters reported.

Kurdistan24, a local media station, reported: “US Secretary of Energy Chris Wright on Tuesday hailed the Kurdistan Region’s vast oil and gas reserves as an opportunity for mutual prosperity, describing Prime Minister Masrour Barzani’s landmark energy agreement with American companies as a strategic step forward in strengthening economic ties between Erbil and Washington.”

Iraqi Oil Minister Hayyan Abdul Ghani said the Kurdistan regional authorities would send 190,000 barrels a day to the Iraqi national oil marketing organization SOMO.

This appears to be the amount per day that will travel to Turkey and be marketed. It is expected to grow to some 220,000 barrels per day. Some 50,000 barrels will remain for local use.

France and the UK both welcomed the new oil deal. This complex process took many months, and it is a significant achievement for the Kurdish authorities to turn on the oil tap. It will strengthen the KRG and help put it back on a good financial footing.

The KRG hosts US and other coalition forces and is a key strategic partner. Having it be economically powerful is also important for the region.