A new deal for Iraqi oil exports allows Turkey to set its own terms

Turkey has decided to suspend the deal to ship Iraqi oil through the port of Ceyhan, opening the door to a new agreement with revised terms. 

Although the agreement signed in 1973 and not implemented until 1977 allowed Iraq to export its oil to international markets via the Mediterranean, thus avoiding the Strait of Hormuz, Iraqi analysts have pointed out that this decision by the Turkish government will benefit both countries, as it will put Baghdad and Ankara in a better position and will allow Turkey to establish conditions that are advantageous to it. 

For the Turkish authorities, this turnaround is an opportunity to react to Baghdad, which had halted oil transfers through the port of Ceyhan, causing major economic losses for Erdogan's government. However, this is not the first time that the Iraqis have halted hydrocarbon supplies. 

In March 2023, Iraq halted the export of 450,000 barrels of crude oil per day from the Kurdistan region and the Kirkuk oil fields in the north of the country after winning a long legal battle against Turkey in the International Court of Arbitration, which began in 2014 after Iraq accused Turkey of violating the joint agreement by allowing the Kurdish government to send oil through the Kirkuk pipeline to the port of Ceyhan. 

Since then, for more than nine years, it is believed that the pipeline has been transporting more than 1.6 million barrels of crude oil per day outside the agreement. As a result, Turkey was ordered to pay 1.5 billion dollars for unauthorised Iraqi exports between 2014 and 2018, against which Turkey has lodged an appeal that has not yet been finally resolved. 

In any case, Turkey has tried on several occasions to negotiate and ‘calm the waters’ with Iraq through a publication in the Official Gazette in which Turkey stated that there is still no official decision on the cancellation and subsequent approval of the new agreement, as all protocols expire on 27 July 2026. 

In fact, a senior Turkish official recently stated that his country still intends to restart the Iraq-Turkey oil pipeline, despite having announced the end of the current agreement. 

In July 2025, the central government of Iraq announced that oil exports from the Kurdistan region would resume immediately, despite recent drone attacks that have significantly affected production in the area. 

However, Turkey's position of strength over Iraq due to the latter's dependence on the former for water has placed Ankara in a position to impose its conditions on Baghdad, thereby increasing its benefits from the new agreement and making it unbalanced. ‘A new and significant stage for the Iraq-Turkey oil pipeline will benefit both countries and the entire region,’ added a Turkish government source. 

However, since February 2023, the two countries have been negotiating to resolve a crisis that is hampering oil transport from the north of the country to the Turkish port of Ceyhan on the Mediterranean. Meanwhile, the private sector remains on the sidelines, despite a source from the APICORP Group, an oil company active in Kurdistan, indicating that the resumption of the pipeline depends on obtaining written agreements.