Kurdistan has cut its oil production by 50% at the request of Baghdad as Iraq, OPEC’s second-largest producer, seeks to meet its output quotas.
Kamal Mohammad Salih, the region’s minister of electricity and acting minister of natural resources, confirmed the reduction, noting that Kurdistan has been pumping 140,000 barrels per day (bpd) since September 2.
Iraq has consistently exceeded its production limit, despite commitments made under the OPEC+ agreement aimed at preventing an oil surplus.
While Baghdad has promised to adhere to its quota and compensate for previous overproduction, data from Bloomberg indicates that Iraq continued to pump above its target last month.
Tensions between the Kurdistan Regional Government (KRG) and Iraq’s federal government have been ongoing since March 2023, when Turkey suspended oil flows through key transit pipelines. This halt followed an arbitration ruling that ordered Turkey to pay around $1.5 billion in damages to Iraq for unauthorized crude transportation. The shutdown has resulted in significant financial losses for both sides, with the Kurdish region losing billions in revenue and Iraq losing over $16 billion, according to Salih.
“It’s a lose-lose situation—no one benefits,” Salih remarked during an Atlantic Council regional conference on clean and secure energy, held in Istanbul on Thursday. He was preparing for a meeting with U.S. Assistant Secretary of State for Energy Resources Geoffrey Pyatt, where he planned to request U.S. assistance in pressuring Baghdad to resolve the conflict.
Salih emphasized the urgency of reopening the pipelines, citing regional tensions and rising oil prices as additional reasons for a swift resolution. While Turkey announced in October 2023 that it was ready to resume pipeline operations, the final decision lies with Baghdad.
Before the closure, Iraqi Kurdistan had been exporting 400,000 bpd via Turkey. Pyatt expressed U.S. support for restarting oil exports, noting that both Turkey and the U.S. are keen to see the flow of oil resume through the Iraq-Turkey pipeline. “This is a message we’ve conveyed at the highest levels in Baghdad, and we will continue to do so,” Pyatt said at the conference.
