ERBIL, Kurdistan Region - Iraq is set to increase oil flows through Turkey, following a recently signed interim oil agreement between the two sides, Baghdad's oil minister confirmed on Monday, adding that transit talks with Iran through the Strait of Hormuz are also ongoing and may bear fruit "in the coming days."
The agreement with Turkey seeks “to ensure the continuity of crude oil exports from the Kurdistan Region’s fields, alongside an ambitious plan to route part of the southern oil through the pipeline to achieve export volumes exceeding 700,000 barrels per day [bpd],” Basim Mohammed Khudair stated, as quoted by the state-run Iraqi News Agency (INA).
Iraq on Saturday signed a one-year deal with Turkey after the expiration of the 1973 pipeline agreement a day earlier. Although Baghdad had sought to renew the decades-long treaty, Ankara wanted to change its terms pushing for a more “comprehensive” deal.
The agreement sets an initial export capacity of around 750,000 bpd, contingent on security conditions, the restoration of oil production in the Kurdistan Region, and the completion of logistical preparations needed to move larger quantities of southern Iraqi crude northward.
The Iraqi oil minister also pointed to negotiations with Iran to afford Iraqi oil tankers greater leeway for transit through the Strait of Hormuz, as tensions in the strategic waterway continue between Tehran and Washington, noting that the issue was raised during Iraqi Prime Minister Ali al-Zaidi's visit to Tehran in late July.
"The Iraqi delegation held talks with the Iranian side to discuss the unhindered movement of oil tankers through the Strait of Hormuz, with expectations of reaching significant understandings in the coming days to protect and facilitate the passage of shipments and tankers," he said.
The Strait of Hormuz, a vital waterway through which around one-fifth of global energy supplies pass, has been a contentious point between the US and Iran since the onset of the six-week war in late February, with Tehran claiming sovereignty over Hormuz and requiring vessels to obtain authorization for passage, while Washington has imposed a naval blockade on Iranian ports.
For Iraq, the regional war and the closure of the Strait of Hormuz dealt a major blow to the country's oil sector and broader economy, with Iraqi crude production falling from about 4.14 million barrels per day (bpd) before the crisis to 1.49 million bpd at the height of the blockade.
A prominent financial adviser to the Iraqi government, Mazhar Mohammed Salih, told Rudaw in early March that disruptions to oil exports were costing Iraq between $200 million and $255 million per day. He added that even if oil prices reached $150 per barrel, Iraq's revenue could still fall from $7 billion to $1 billion per month.
As of the latest data, Iraq's national marketer, the State Organization for Marketing Oil (SOMO), reported that around 24.5 million barrels of oil were exported in June, marking a notable recovery even though shipping through Hormuz has yet to normalize.
Moreover, at least two vessels - the Marshall Islands-flagged Safesea Vishnu, chartered by an Iraqi company, and the Malta-flagged Zefyros, carrying Basra Gas Company condensate - were struck inside Iraqi territorial waters in the ship-to-ship anchorage area near Basra Oil Terminal.
In the wake of the regional escalation, Iraq has sought alternative routes to export its oil, primarily through overland oil tankers to Syria and through its pipelines to Turkey's Ceyhan port.
In a statement posted on X after his Ankara visit, Iraqi Prime Minister Zaidi said, “Today, Iraq and Türkiye achieved an important strategic milestone to ensure the uninterrupted flow of our oil exports and strengthen economic cooperation.”
