The Kurdistan Region Government in Iraq declared a halt to all oil exports on Friday after experiencing an attack on a crude oil pipeline earlier in the week.
The pipeline suffered an attack on Wednesday, disrupting the flow of crude.
The KRG-controlled area of Iraq manages oil exports through the pipeline to the Ceyhan port in Turkey.
The market is carefully watching Iraq’s crude oil production and exports, as the most non-compliant member of the OPEC+ production cut agreement for nearly the entire duration of that agreement. Rumors surfaced earlier this week that Iraq may not be on board with extending the current production quotas beyond January 2021, after Saudi Arabia and Russia hinted that the oil market may not support the scheduled relaxing of cuts then as planned.
Iraq quickly dispelled the notion, however, that it would not be behind
extending the cuts, stressing that the nation would stand behind whatever OPEC+ unanimously agreed upon.
Iraq has been in a difficult place with its quota under the OPEC+ agreement, not only cash-strapped from diminishing oil revenues as a result of fewer barrels shipped and a lower price of oil, but because the federal Iraqi government has little if any control over the crude oil industry in the Kurdistan area of Iraq.
Iraq remains OPEC’s second-largest oil producer behind Saudi Arabia, relying on oil to contribute roughly 90% to the overall Iraqi budget. The Kurdistan region makes up a good chunk of Iraq’s total oil production.
Earlier this month, the federal Iraqi government proposed the establishment of a new oil company that would be managed jointly by Baghdad and Erbil to operate crude oil production and exports from the semi-autonomous region of Kurdistan as part of ongoing talks between the two parties.