Baghdad: In a major breakthrough amid mounting economic and geopolitical pressure, Iraq’s federal government and the Kurdistan Regional Government (KRG) have reached a new agreement to resume oil exports through the northern pipeline connecting Iraqi fields to Turkey’s Mediterranean port of Ceyhan. The deal comes at a critical moment when Iraq’s energy sector is grappling with severe disruptions caused by regional conflict and internal disputes.
The agreement is expected to revive a key export corridor that has remained either partially inactive or caught in repeated stoppages due to legal battles, political disagreements, and security concerns. For Iraq, where oil revenues account for more than 90 percent of government income, restoring exports is not just an economic priority but a national necessity.
The deal follows weeks of intense friction between Baghdad and Erbil, during which negotiations had stalled over financial arrangements, control over exports, and broader political issues. Kurdish authorities had earlier resisted restarting flows, accusing the central government of imposing economic restrictions and failing to address security concerns affecting oil infrastructure.
Baghdad, on the other hand, maintained that exports must be conducted under federal authority and accused the Kurdish side of placing unrelated conditions on the process. These disagreements had effectively blocked efforts to restore oil flows even as the country’s economic situation worsened.
The urgency to reach an agreement has been intensified by the wider Middle East crisis, particularly disruptions in the Strait of Hormuz, a crucial global oil transit route. The conflict has sharply reduced Iraq’s ability to export crude from its southern terminals, forcing the country to rely on costly and inefficient alternatives such as trucking oil through neighboring states.
As a result, Iraq’s overall oil production and export capacity have dropped significantly, placing enormous strain on public finances and raising concerns about the government’s ability to sustain spending and salaries.
The pipeline linking Iraq to Turkey’s Ceyhan port has long been a vital artery for the country’s oil exports. Before its repeated shutdowns, it handled hundreds of thousands of barrels per day and contributed significantly to global oil supply.
Energy officials suggest that restarting this route could initially restore exports of around 250,000 barrels per day, with the potential to scale up further if operations stabilize and cooperation between Baghdad and Erbil holds.
The pipeline also offers Iraq a strategic alternative to southern export routes, reducing dependence on the volatile maritime corridor and helping diversify export channels.
The latest agreement is part of a broader, long-running dispute between Iraq’s central government and the Kurdish region over control of oil resources and revenue sharing. Tensions date back more than a decade, when the Kurdish region began exporting oil independently, prompting legal challenges from Baghdad.
A major setback occurred in 2023, when an international arbitration ruling halted exports through Turkey after determining that shipments had bypassed federal authority. Since then, multiple attempts to restart flows have been made, including temporary agreements in 2025 that allowed limited exports but failed to produce lasting stability.
The resumption of oil exports through the northern pipeline is expected to provide immediate financial relief to Iraq while also easing concerns in global energy markets already strained by geopolitical instability. Increased supply from Iraq could help stabilize prices and offset disruptions elsewhere in the region.
However, analysts caution that the agreement remains fragile. Key issues such as payment mechanisms, the role of international oil companies, and security guarantees for infrastructure remain unresolved and could trigger fresh disputes if not managed carefully.
While the deal signals a rare moment of cooperation between Baghdad and Erbil, its success will depend on sustained political will and mutual trust both of which have been in short supply in the past.
For now, the agreement represents a crucial step toward stabilizing Iraq’s oil sector and preventing deeper economic crisis. Yet, with regional tensions still high and internal divisions unresolved, the path ahead remains uncertain, and the durability of the deal will be closely watched by global markets and political observers alike.