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ERBIL, Kurdistan Region - Iraq’s foreign minister on Tuesday told Rudaw that the price of the Kurdistan Region’s crude oil will no longer be lower than the price of the market, adding that Baghdad will officially request Ankara to allow the flow of oil from the Region again.
Fuad Hussein said during an interview with Rudaw’s Sangar Abdulrahman on Tuesday that the temporary deal struck by Erbil and Baghdad earlier in the day will help the Kurdistan Regional Government (KRG) sell its oil at a higher price in the global markets.
Companies buy the KRG oil “cheaply,” he said, adding that the price “does not match the market price.”
“Therefore, there are discussions [with buying companies] so that the price of the oil becomes the same as the price of the market,” noted the Kurdish minister.
Kurdistan Region Prime Minister Masrour Barzani and Iraqi Prime Minister Mohammed Shia’ al-Sudani on Tuesday signed an agreement to resume the Region’s oil exports to Turkey more than ten days after it was halted following a ruling by a Paris-based arbitration court.
Hussein said the deal does not mean the KRG has surrendered but it brings a solution to their bilateral issues, adding that the deal is supported by Kurds, Sunnis and the ruling Coordination Framework.
The KRG prime minister said in 2021 that they sold a barrel of oil $10 cheaper than the price of Brent, the most commonly-traded oil, due to its lower quality and higher production fees. However, Barzani denied reports that KRG sells its oil for $10-11 cheaper than the Iraqi government.
The KRG has been experiencing an economic crisis since 2014, due to the fight against the Islamic State (ISIS), the frequent suspension of its budget from Baghdad, a drop in oil prices and, most recently, the spread of coronavirus.
The International Chamber of Commerce (ICC) arbitration court ruled on March 23 that Turkey had breached a 1973 pipeline agreement that obliges the Turkish government to abide by instructions issued by Iraq regarding the transport of crude oil exported from Iraq. Turkey informed Iraqi authorities that it would not allow the KRG’s oil to be loaded onto ships at Ceyhan port without permission from Baghdad.
Oil firms in the Kurdistan Region halted production or reduced output after the ruling, with some storing oil.
The KRG exported some 400,000 barrels of crude per day to global markets through Turkey. The Iraqi government also exported about 75,000 barrels of Kirkuk oil per day through the same pipeline.
Hussein said that no changes will happen to the process of KRG’s oil exportation, except for the price, warning that buying companies will “lose” if they refuse KRG’s new price of the crude.
The exportation of the Kirkuk and KRG crude to Turkey has not resumed yet.
The Iraqi foreign minister said that Baghdad has decided to inform Ankara to resume the flow of oil from KRG pipelines.
“In the framework of the agreement signed today, the ministry of oil will send a letter to Turkey, asking it to reopen the pipelines so that we can resume the export of the oil to Ceyhan,” he said.
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