Iraq restarts some Kirkuk oil exports after year-long halt

Iraq on Friday restarted exports of Kirkuk oil, halted a year ago due to a standoff between the central government and Kurdistan’s semi-autonomous region, after a new government in Baghdad agreed a tentative deal with Erbil.

The development is a win for the US government, which has been urging both sides to settle the dispute and resume flows to help address a shortage of Iranian crude in the region after Washington imposed new sanctions on Tehran.

US State Department spokeswoman Heather Nauert said on Twitter that resumption of exports of Kirkuk oil was “another important step in our efforts to reduce Iran’s oil exports.”

Flows resumed at a modest level of around 50,000-60,000 barrels per day (bpd) compared with a peak of 300,000 bpd seen last year and it was not clear when and by how much they would rise, industry sources said.

The Kirkuk crude is being exported to the Turkish Mediterranean port of Ceyhan by a pipeline crossing Kurdistan.

A spokesman for Iraq’s Oil Ministry, Asim Jihad, confirmed exports had restarted, adding that an agreement had been reached to resume flows at 50,000-100,000 bpd.

“The resumption of Kirkuk shipments of between 50,000 and 100,000 barrels per day will not add to Iraq’s total exports,” Jihad said. Oil prices rose, with Brent crude LCOc1 up more than $1 per barrel, supported partially by the lowerthan-expected flows from Kurdistan.

The deal signals that new Iraqi Prime Minister Adel AbdulMahdi and Oil Minister Thamir Ghadhban are ready to work with Erbil despite previous tensions and a failed independence referendum in September 2017.

The halting of exports from Kirkuk in October 2017 stopped almost 300,000 bpd flowing out of Iraq towards Turkey and international markets—causing a net revenue loss of some $8 billion over the past year.

Most of Iraq’s exports come from southern fields, but Kirkuk is one of the biggest and oldest oilfields in the Middle East, estimated to contain 9 billion barrels of recoverable oil.

Exports had been on hold since Iraqi government forces retook Kirkuk from Kurdish authorities in 2017. The Kurds had taken control of Kirkuk and its oilfields after Islamic State militants drove the Iraqi army out in 2014, and Kurdish forces, in turn, ejected the militants. A pipeline Baghdad once used for export via Turkey was wrecked by Islamic State - leaving only one working.