After a two-and-a-half-year hiatus, crude oil exports from Iraq's semi-autonomous Kurdistan region to Turkey's Mediterranean port of Ceyhan officially recommenced on September 27, 2025. This pivotal development, driven by an interim agreement between the Iraqi federal government, the Kurdistan Regional Government (KRG), and various international oil companies, is set to immediately bolster global oil supply and exert downward pressure on international crude prices. The resumption marks a significant shift in energy geopolitics and commodity markets, offering a fresh supply stream to a global economy constantly seeking stability amidst fluctuating energy dynamics.

The halt in exports, which commenced in March 2023, originated from a ruling by the International Chamber of Commerce (ICC). The ruling mandated Turkey to compensate Iraq $1.5 billion for unauthorized oil exports facilitated by the KRG between 2014 and 2018. This legal imbroglio compounded long-standing disputes between Baghdad and Erbil concerning the sovereign control and equitable revenue sharing of Kurdish oil resources, ultimately leading to the prolonged disruption.

Detailed Coverage: A Long-Awaited Restart

Crude oil flows from Iraq's northern Kurdistan region to Turkey's Ceyhan port officially resumed on Saturday, September 27, 2025, at approximately 6:00 a.m. local time (0300 GMT). Iraqi officials reported smooth operations, devoid of significant technical issues, marking the end of a protracted two-and-a-half-year halt. This resumption is underpinned by a tripartite agreement involving the Iraqi federal government, the Kurdistan Regional Government (KRG), and the international oil companies (IOCs) operating in the region.

Under the terms of the newly forged agreement, the KRG has committed to delivering a minimum of 230,000 barrels per day (bpd) to Iraq's State Oil Marketing Company (SOMO) for export. An additional 50,000 bpd will be ring-fenced for domestic consumption within the Kurdistan Region. Initial export volumes are projected to hover between 180,000 and 190,000 bpd, with a gradual increase anticipated to reach the 230,000 bpd target. SOMO will assume ownership of the oil from the Peshkabour metering station to the Ceyhan export terminal, shouldering all associated costs of transportation, storage, and loading. An independent trader will facilitate sales from Ceyhan, leveraging SOMO's official pricing mechanisms. For the international oil companies, the agreement stipulates a payment of $16 per barrel to cover production and transportation costs, a figure slated for adjustment in 2026 following an evaluation by a Baghdad-appointed consultant.

The genesis of the export halt traces back to March 2023, when Turkey ceased pipeline operations after an International Chamber of Commerce (ICC) arbitration ruling. The ICC ordered Turkey to pay Iraq approximately $1.5 billion in damages for allowing the KRG to independently export oil between 2014 and 2018, in violation of a 1973 pipeline agreement. Iraq had initiated this arbitration in 2014, asserting SOMO's sole authority over all Iraqi oil exports. This abrupt shutdown removed around 450,000 bpd from global markets, precipitating significant economic hardship for the Kurdistan region. A period of stalled negotiations characterized 2023 and early 2025, as persistent financial and legal disagreements between Baghdad, Erbil, and the involved oil companies hampered efforts to restore flows. In July 2025, Turkey signaled its intent to renegotiate by canceling existing pipeline agreements, effective July 27, 2026. Concurrently, Baghdad and Erbil reached an understanding that the KRG would cede control of its crude to SOMO for export. The momentum for resumption rapidly accelerated in late September 2025. On September 23, Iraq's federal government and the KRG, with crucial diplomatic backing from the United States, announced a preliminary agreement with IOCs. By September 26, Iraq's state news agency, citing SOMO, confirmed the impending restart, which materialized on September 27, 2025.

Key players instrumental in this complex saga include the Iraqi Federal Government, led by Prime Minister Mohammed Shia' al-Sudani and the federal Oil Ministry, represented by SOMO (State Oil Marketing Organization) and its director, Ali Nizar al-Shatari. Their primary objective has been to reassert sovereign control over all Iraqi oil exports and revenue. The Kurdistan Regional Government (KRG), under Prime Minister Masrour Barzani and its Ministry of Natural Resources, has played a pivotal role in coordinating with producers and managing regional oil infrastructure. The Republic of Turkey, through its Energy and Natural Resources Minister Alparslan Bayraktar, is a critical transit facilitator, connecting the oil fields to the Mediterranean port of Ceyhan. International Oil Companies (IOCs) such as DNO (OSL: DNO) and Gulf Keystone (LSE: GKP) are vital stakeholders, operating the oil fields in the Kurdistan region and ensuring crude production and delivery to the pipeline. Finally, the United States Government, particularly under the Trump administration, actively championed the resumption of exports, viewing it as a strategic move to stabilize crude prices and diminish reliance on Iranian oil. U.S. diplomatic efforts were crucial in mediating and facilitating the final agreement.

Initial market reactions to the resumption were immediate and discernible. On Monday, September 29, global oil prices experienced a decline. Brent crude futures (ICE: B) fell by 0.64% to $68.78 a barrel, while U.S. West Texas Intermediate (WTI) crude (NYMEX: CL) dropped by 0.75% to $65.23 a barrel. This dip followed a period where Brent had recently reached its highest point since July 31. Industry analysts noted that this additional supply, even at initial volumes, contributes to global oil supplies at a juncture when OPEC+ is also poised to increase its output in November. The International Energy Agency (IEA) has forecasted a potential record oversupply in 2026, suggesting that the market may be heading for a glut. For the Kurdistan region, the restart of exports is anticipated to alleviate severe economic pressures, including the delays in public sector salaries that plagued the region during the halt. Turkish Energy Minister Bayraktar highlighted the long-term potential, suggesting that a full-capacity pipeline could see Iraq exporting up to 40% of its crude through Turkey, potentially generating $40 billion annually in trade. While the immediate impact on European energy security is considered modest, some experts believe the resumption signifies notable geopolitical shifts.

Companies That Win or Lose from the Resumption

The resumption of Northern Iraqi crude exports to Ceyhan, after a two-and-a-half-year halt, marks a pivotal moment for numerous companies, directly influencing their financial health and market standing. The exports, which were suspended in March 2023 following an international arbitration ruling against Turkey, recommenced on September 27, 2025, under an interim agreement between Iraq's federal government, the Kurdistan Regional Government (KRG), and various international oil companies (IOCs). Initial export volumes are projected at 180,000-190,000 barrels per day (bpd), with a gradual increase to 230,000-240,000 bpd, representing approximately half of the pre-shutdown level of 400,000-450,000 bpd.

Companies Standing to Gain:

The resumption is overwhelmingly positive for oil producers operating in the Kurdistan Region of Iraq (KRI) and entities involved in the pipeline and terminal operations. These companies collectively faced estimated daily revenue losses of $35 million during the prolonged shutdown.

• ShaMaran Petroleum (TSXV: SNM): This Canadian oil and gas producer, a part of the Lundin Group, is heavily invested in the Kurdistan region. ShaMaran Petroleum is now poised to restart oil exports via the Iraq-Turkey Pipeline. The company's stock has already shown significant growth in anticipation of this event. The resumption will enable it to receive provisional payments of $16 per barrel to cover production and transportation costs, with a future reconciliation based on its Production Sharing Contracts. ShaMaran's Atrush Block currently produces around 35,000 bopd, and its Sarsang Block yields over 30,000 bopd, all set to benefit from restored export channels.
• Gulf Keystone Petroleum (LSE: GKP): As the operator of the Shaikan field in Iraqi Kurdistan, with a capacity of 40,000 bpd, Gulf Keystone stands to gain substantially. The company has announced that export volumes are expected to reach full capacity in the coming days due to increased pipeline availability. This will directly translate into significantly increased revenue and improved cash flow, a welcome change after a period of selling crude at steep discounts to local buyers during the halt.
• DNO ASA (OSX: DNO): As the largest international producer in Kurdistan, operating the Tawke and Peshkabir fields, DNO is a major beneficiary. While DNO initially voiced concerns regarding payment security and the recovery of approximately $300 million in overdue receivables, it has received instructions to prepare for the commencement of oil exports. The agreement to provisionally pay $16 per barrel for production and transportation costs offers a pathway towards financial stability and the recovery of past investments, even though the company initially chose to continue selling its share to local Kurdish buyers at a higher price (in the "low $30s" per barrel) while delivering the government's share for export. DNO has also embarked on a major production expansion program, which will now have a clearer export route.
• Genel Energy (LSE: GENL): This UK-listed company is another crucial operator in Iraqi Kurdistan. Similar to DNO, Genel Energy had been actively negotiating for payment certainty and the settlement of outstanding arrears, estimated to be part of the $1 billion owed to producers. The resumption of exports provides a vital avenue for Genel to stabilize its operations, potentially recover past dues, and secure future investment decisions in the region.
• Other IOCs: Several other international and local companies operating in Kurdistan, including America's HKN and Hunt, local KAR Group, and Forza Petroleum, have reached agreements in principle to resume exports. These companies will benefit from renewed revenue streams and the ability to invest consistently in new developments, thereby boosting regional output.
• BOTAS (Petroleum Pipeline Corporation): As the Turkish state company responsible for operating the Iraq-Turkey pipeline and the Ceyhan oil terminal, BOTAS will see a significant resurgence in transit fees from the crude oil flowing through its infrastructure. The pipeline boasts an annual transport capacity of 35 million tons (1.5 million bpd). The renewed revenue from transit fees will bolster BOTAS's financial position and reinforce Turkey's strategic importance in regional energy flows.
• BP plc (LSE: BP): BP is actively involved in the redevelopment of the Kirkuk field and its neighboring areas. While the Kirkuk-Ceyhan pipeline previously transported 400,000-450,000 bpd of Kirkuk crude, the restart of the pipeline offers a crucial export outlet for the increased output from these fields, in which BP plans to invest up to $25 billion over 25 years.

Companies That Might Face Challenges or Indirect Losses:

While the overall impact is positive for the region, the increased supply of crude to the global market could have broader implications for other market participants.

• Global Oil Traders and Refineries: The addition of 180,000-240,000 bpd of crude to international markets comes at a time when global oil demand growth is moderating, and OPEC+ is gradually unwinding production cuts. This increased supply could contribute to an oversupply scenario, potentially leading to lower crude oil prices. For refineries that had adjusted their supply chains during the halt, this means recalibrating their sourcing strategies.
• Alternative Crude Suppliers: During the pipeline shutdown, global operators sought and secured alternative crude supplies. With Northern Iraqi crude returning to the market, these alternative suppliers might encounter increased competition or experience a slight reduction in demand for their specific crude grades, potentially impacting their market positioning and pricing power.
• Shipping Companies (indirectly): While more oil flowing generally correlates with increased shipping demand, the initial volumes are not expected to immediately return to pre-shutdown levels. The impact on regional shipping rates will depend on the overall market balance and the pace at which export volumes ramp up.

The resumption brings much-needed financial relief and stability to the Kurdistan Regional Government, which incurred an estimated $5-6 billion in losses during the shutdown and faced significant delays in public sector salaries. For the IOCs, it provides a clearer pathway to recover investments, resume development activities, and normalize their revenue streams after operating under challenging conditions, including selling crude at substantial discounts locally. The agreement, by offering surety of payment, fosters a more stable investment environment in Iraq. However, the longer-term financial implications for the IOCs will hinge on the final reconciliation of payments with existing Production Sharing Contracts and the mechanism established to settle the substantial outstanding debts (around $1 billion in arrears). For Turkey, the restart strengthens its energy security by diversifying its crude supply and re-establishing its role as a key energy transit hub. Iraq, as a whole, increases its overall export capacity and market presence, bolstering its position within OPEC+.

Wider Significance: Reshaping Regional Energy Dynamics

The resumption of Northern Iraqi crude exports to Ceyhan in late September 2025 transcends mere commodity flow; it signifies a crucial step toward stabilizing Iraq's oil exports, reinforcing cooperation between the federal and regional governments, and reshaping regional energy dynamics. This "historic agreement" provides substantial financial relief for Iraq, with projections indicating a contribution of approximately $400 million to $500 million monthly to the federal budget, thereby bolstering overall oil revenues and supporting the national economy. For the Kurdistan Region, the agreement alleviates severe economic strain, as the region is heavily reliant on oil revenues, helping to secure budgetary allocations for the KRG, including public sector salaries, which were severely impacted during the export freeze. Turkey also benefits significantly by strengthening its energy supply and diversifying global markets, further solidifying its role as an energy corridor between the Gulf and Europe, potentially fostering a new "energy triangle" connecting these vital regions.

This influx of crude, initially at 180,000 to 190,000 barrels per day (bpd) with the potential to scale up to 230,000 bpd, and eventually to 400,000-500,000 bpd as infrastructure expands, arrives at a juncture when the global oil market is already projected to experience an excess of approximately 1.3 million bpd in 2025. This surplus is largely attributed to slowing demand growth, resilient non-OPEC+ supply, and cautious adjustments by OPEC+. Oil prices, particularly Brent crude (ICE: B), were already anticipated to average around $66/bbl in late 2025, a downward revision from earlier forecasts, reflecting expectations of rising inventories due to supply outpacing demand. The additional Iraqi crude could further contribute to this downward pressure on prices. OPEC+, which includes Iraq, has been strategically unwinding production cuts to regain market share, and Iraq's delegate has consistently asserted the country's right to demand an increased production share given its expanded capacity.

The ripple effects on partners are largely positive. The Iraqi Federal Government reasserts its authority over all Iraqi oil exports, including those from Kurdistan, which are now marketed through the State Oil Marketing Organization (SOMO). This centralizes control over a vital national resource and boosts federal revenues. The Kurdistan Regional Government (KRG) gains a stable, legitimate channel for its oil exports, resolving a long-standing point of contention with Baghdad. The agreement provides a framework for transparent production reporting and revenue transfers, helping to fund its operations and public services. Turkey benefits from renewed oil flows, enhancing its energy security and potentially increasing its trade volume with Arab countries. The pipeline, with a full capacity of 1.5 million bpd, solidifies Turkey's strategic importance as an energy hub. International Oil Companies (IOCs), including ShaMaran Petroleum (TSXV: SNM), Gulf Keystone Petroleum (LSE: GKP), DNO ASA (OSX: DNO), and Genel Energy (LSE: GENL), involved in the Kurdistan Region have agreed to the deal, which ensures payment surety for their production and transportation costs ($16 per barrel). They will also work with Kurdish authorities to settle outstanding debts. The US government has welcomed the deal, viewing it as promoting a stable investment environment for American companies. On the competitive front, the increased supply from Iraq could add to the global crude surplus, potentially impacting other oil-exporting nations, particularly those within OPEC+ that are striving to manage supply and maintain price stability. While initial volumes are moderate, the potential for ramp-up could influence market share discussions within OPEC+.

The regulatory and policy implications are significant. The core of the resumption agreement lies in a new trilateral framework involving the Iraqi federal government, the KRG, and international oil companies. Under this framework, all Kurdish crude, excluding quantities for local consumption, is delivered to SOMO for export via Ceyhan. This directly addresses previous legal ambiguities and differing interpretations of Iraq's 2005 constitution regarding resource management and revenue sharing. The deal aims to establish clearer legal parameters, including dispute resolution mechanisms and international arbitration provisions, to provide greater certainty for investors. A significant policy challenge, however, remains with Turkey's decision, announced in July 2025, not to renew the 1973 Iraq-Turkey Crude Oil Pipeline Agreement, which is set to expire in July 2026. Ankara is actively seeking a new, more comprehensive energy agreement with Baghdad that could encompass oil, gas, petrochemicals, and electricity, and ensure full utilization of pipeline infrastructure. The current interim deal with Turkey suggests an ongoing negotiation process regarding the long-term legal framework for these crucial exports.

Historically, the halt in exports in March 2023 stemmed from an International Chamber of Commerce (ICC) ruling that found Turkey liable for allowing unauthorized Kurdish oil shipments between 2014 and 2018, ordering Turkey to pay Iraq $1.5 billion in damages. This underscores a long-standing and contentious dispute over "resource federalism" in Iraq, where the KRG had independently exported oil without Baghdad's consent, leading to significant financial losses and strained relations. The Association of the Petroleum Industry of Kurdistan (APIKUR) estimated losses to Iraq due to the pipeline closure at over $35 billion. While oil export disruptions for political or economic leverage are not new—the 1973 Arab oil embargo being a prime example—the current situation, primarily an internal dispute over sovereignty and revenue sharing complicated by a transit country's role, highlights the persistent challenges of managing hydrocarbon resources in politically complex regions. The successful, albeit temporary, resumption through a negotiated agreement sets a precedent for resolving such disputes through dialogue and international mediation, especially with active US diplomatic involvement. However, the lingering constitutional ambiguities and the upcoming expiration of the Iraq-Turkey pipeline agreement suggest that political and regulatory risks to consistent operations could still pose future challenges.

What Comes Next: Navigating a Complex Future

The resumption of Northern Iraqi crude exports to Turkey's Ceyhan port in late September 2025, following a 2.5-year hiatus, ushers in a complex and evolving future for Iraq, the Kurdistan Regional Government (KRG), and the global oil market from late 2025 onwards. This restart, facilitated by a tripartite agreement, sets the stage for both short-term stabilization and long-term strategic considerations.

In the short term (late 2025 - 2027), the immediate focus will be on stabilizing flows and cementing the new operational framework. Initial export volumes are targeted at approximately 180,000-190,000 barrels per day (bpd), with the potential to gradually increase to 230,000 bpd, and eventually to 400,000-500,000 bpd as production capacity ramps up and infrastructure is fully utilized. The KRG will experience significant fiscal benefits, including restored predictable revenue streams, enabling it to address accumulated salary arrears for public sector employees and reduce dependence on Baghdad for budget transfers. This financial stability is crucial for the KRG's governance and public service delivery. The agreement also includes provisions for settling outstanding debts to international oil companies, a key demand that had delayed the restart. Under the new arrangement, Iraq's State Organization for Marketing of Oil (SOMO) will have exclusive authority to market and sell all oil exports from Kurdistan, a significant shift from the KRG's previous independent marketing. Revenue will flow through federal mechanisms, with the KRG receiving its constitutional share based on population-based formulas and federal budget law. This centralized approach aims to ensure transparent revenue collection and distribution. The return of Northern Iraqi crude adds approximately 0.2-0.4% to global oil supply, helping to offset production declines in other mature basins and contributing to market stability. This medium-gravity, moderate-sulfur crude is desired by many Mediterranean refiners. The pipeline system, which previously carried 400,000-450,000 bpd, will require a ramp-up period to reach full capacity, and there is potential for new infrastructure investments within Kurdistan, fueled by the restored revenues.

Looking further ahead (2028 onwards), the long-term outlook will be shaped by the durability of political agreements, global energy demand trends, and Iraq's strategic energy ambitions. The current agreement, while a breakthrough, exists within a history of complex and often contentious relations between Baghdad and Erbil over oil. The stability of exports hinges on sustained political cooperation and the successful resolution of remaining disputes over revenue sharing and field management. A critical factor is the upcoming expiration of the current export agreement with Turkey in July 2026, necessitating new negotiations with Ankara for its renewal. The outcome of these discussions will be crucial for the long-term viability of the Ceyhan export route. Iraq aims to increase its overall crude oil production capacity to 7 million bpd by 2027, and while much of this growth is expected from southern fields, stable northern exports are vital for Iraq's national output and its push for a higher OPEC+ quota. Iraq has the potential to become the world's fourth-largest oil producer by 2030, a goal supported by a stable northern export route. Furthermore, the global energy transition will continue to influence demand patterns, and Northern Iraqi crude will need to remain competitive in an evolving energy landscape.

Both the KRG and the Iraqi federal government will need to demonstrate flexibility and strategic foresight. The KRG's independent marketing era is effectively over, requiring a full embrace of SOMO's authority over exports. Its strategic pivot will involve effective cooperation with Baghdad to ensure its share of revenues is consistent and timely, while also focusing on developing its oil sector within the new federal framework. Baghdad, in turn, needs to consistently uphold the terms of the agreement, particularly regarding revenue distribution and payments to IOCs, to build trust and prevent future disputes. Successful implementation of revenue management reforms, including transparent collection and clear distribution formulas, will be critical. International oil companies operating in the KRG, such as DNO (OSX: DNO) and Gulf Keystone (LSE: GKP), will require payment surety for both past arrears and future exports to continue their operations and invest in increasing production. The involvement of an independent trader in managing sales and debt recovery could reduce geopolitical risk and attract further foreign investment. While Ceyhan remains the primary northern outlet, long-term strategic planning might involve exploring alternative or supplementary export routes to enhance energy security and reduce reliance on a single pathway, though no immediate plans for this are apparent.

Market opportunities include increased revenue for Iraq, potentially adding billions of dollars annually to the federal budget, and market diversification by providing a reliable supply of medium sour crude to Mediterranean refiners. A stable export environment, coupled with clearer regulatory frameworks and debt repayment mechanisms, could also attract new foreign investment into Iraq's energy sector. However, challenges persist. Iraq's desire to increase exports could lead to conflicts with its OPEC+ commitments, as Iraq has been a serial overproducer in the past, necessitating ongoing negotiations for a higher quota. The reintroduction of significant volumes of crude into global markets could contribute to price volatility. Geopolitical risks, including internal Iraqi political disputes and potential external interference, along with drone attacks on oil fields, could still disrupt flows. Northern Iraqi crude will also face competition from other global suppliers, and its pricing relative to benchmarks like Dated Brent (ICE: B) will be crucial for market absorption.

Potential scenarios range from an optimistic outcome of stable growth and cooperation, leading to consistent export volumes reaching pre-shutdown levels and beyond, driven by strong political will and effective implementation of agreements. A moderate scenario envisions gradual recovery with intermittent challenges, where exports increase but remain below full potential due to occasional political disagreements or delays in investments. The pessimistic scenario forecasts renewed disruptions and instability, where the interim agreement falters due to unresolved underlying issues, leading to renewed economic hardship for the KRG and missed revenue opportunities for Iraq. The path ahead is complex, and the ability of the Iraqi federal government and the KRG to maintain political stability, honor agreements, and attract necessary investment will be paramount in determining the long-term success and growth of this vital export channel.

Comprehensive Wrap-Up: A Cautiously Optimistic Outlook

The resumption of the Northern Iraqi crude export pipeline to Turkey's Mediterranean port of Ceyhan on September 27, 2025, after a prolonged two-and-a-half-year halt, represents a critical turning point for the region and global energy markets. This landmark event, born from a tripartite agreement between Iraq's federal government, the Kurdistan Regional Government (KRG), and various international oil companies, with diplomatic encouragement from the United States, signals a concerted effort to stabilize a vital energy artery.

Key takeaways from this development include the immediate restart of crude flows, with initial volumes of 180,000 to 190,000 bpd expected to gradually increase to 230,000 bpd, though still below the pre-shutdown capacity of 450,000 bpd. This resumption directly addresses the long-standing dispute stemming from the ICC ruling against Turkey and establishes a new export mechanism where the KRG delivers crude to SOMO for centralized marketing. Critically, it offers significant economic relief to the KRG, which faced severe financial strain during the halt, and is projected to contribute substantially to Iraq's federal budget.

Moving forward into late 2025 and early 2026, the market will assess the impact of this additional supply on global oil prices, which have already shown signs of softening due to oversupply concerns. While the initial volumes are modest, the potential for ramp-up could influence OPEC+ dynamics, especially as Iraq, OPEC's second-largest producer, may seek higher production quotas commensurate with its increased capacity. The long-term potential for export volumes to expand to 550,000 bpd by late 2026, contingent on infrastructure investments, underscores Iraq's ambition to boost its overall production capacity significantly by 2030.

The lasting significance of this resumption lies in its potential to stabilize relations between Baghdad and Erbil, resolving a contentious constitutional disagreement over oil and gas resources. It highlights a pragmatic willingness from all stakeholders to find a workable solution, easing economic pressure on the KRG and strengthening Iraq's overall position in the global energy market. However, challenges persist, notably the KRG's outstanding debt of approximately $1 billion to international oil companies and the need for consistent payment mechanisms to ensure long-term stability and full realization of export potential. The upcoming expiration of the current agreement with Turkey in July 2026 also necessitates further negotiations, which will be crucial for the continued viability of the Ceyhan route.

Investors should closely monitor several factors in the coming months. Sustained and consistent export volumes from Ceyhan will be a key indicator of stability. The successful resolution of outstanding debts to IOCs will boost investor confidence and encourage continued investment. The full participation of companies like DNO (OSX: DNO) and Genel Energy (LSE: GENL) through comprehensive agreements ensuring payment surety is vital for maximizing northern Iraq's production. Furthermore, the outcome of the Iraq-Turkey pipeline agreement renewal negotiations in 2026 and any adjustments to OPEC+ policy will significantly shape the market landscape. Finally, the broader geopolitical stability of the region and global economic conditions will continue to influence oil prices and market sentiment.

This content is intended for informational purposes only and is not financial advice