In a significant development for Iraq’s energy sector, the federal government in Baghdad and the Kurdistan Regional Government (KRG) in Erbil have reached a landmark agreement to resume oil exports from the Kurdistan Region. This deal, finalized in September 2025, ends a two-and-a-half-year hiatus that began in March 2023 due to legal disputes over oil export rights. The agreement aims to restore stability, boost Iraq’s economy, and enhance regional cooperation.

Key Terms of the Agreement

• Oil Export Quantities: The KRG has committed to delivering a minimum of 230,000 barrels per day (bpd) of crude oil to Iraq’s State Oil Marketing Organization (SOMO). Additionally, 50,000 bpd will be allocated for domestic consumption within the Kurdistan Region.

• Revenue Distribution: The revenue from the exported oil will be managed through a structured mechanism to ensure transparency and accountability. A portion of the revenue will be allocated to reimburse international oil companies (IOCs) for production and transportation costs. The remaining funds will be directed to the federal budget, supporting national development projects.

• Pipeline Operations: Oil exports will be transported via the Iraq-Turkey Pipeline to the Turkish port of Ceyhan, facilitating access to international markets. The pipeline had been inactive following an arbitration ruling that halted unauthorized Kurdish oil exports.

Economic and Political Implications

The resumption of oil exports is expected to generate significant economic benefits for both the federal government and the KRG. It is anticipated to increase Iraq’s monthly revenue by up to $500 million, providing a much-needed boost to the national economy. For the KRG, the agreement ensures a steady income stream, supporting regional development and stability.

Politically, the deal marks a shift towards greater cooperation between Baghdad and Erbil. It reflects a mutual recognition of each other’s roles in managing Iraq’s oil resources and a commitment to resolving disputes through dialogue. The involvement of international stakeholders, including IOCs and foreign governments, underscores the global significance of the agreement.

Challenges and Future Outlook

While the agreement is a positive step, challenges remain. The implementation of the deal requires effective coordination between various parties, including the federal and regional governments, IOCs, and international partners. Ensuring the security of oil infrastructure, particularly in areas prone to conflict, is crucial for the uninterrupted flow of exports.

Looking ahead, the success of this agreement could serve as a model for resolving other contentious issues between Baghdad and Erbil. It demonstrates the potential for constructive engagement and shared benefits, paving the way for a more unified and prosperous Iraq.

Conclusion

The Baghdad–Erbil oil export agreement represents a pivotal moment in Iraq’s journey towards national cohesion and economic revitalization. By prioritizing cooperation over division, Iraq sets a precedent for resolving complex issues through dialogue and mutual respect. As oil flows once again from the Kurdistan Region to international markets, the hope is that this agreement will lay the foundation for a more stable and prosperous future for all Iraqis.