Turkey and Iraq have entered into discussions to address the ongoing dispute regarding the resumption of crude oil exports from Iraq's northern oilfields, particularly from the Kurdistan Region.

Technical meetings were held between the two countries, focusing on the logistics of restarting oil flows through the Iraqi-Turkey pipeline to the port of Ceyhan in Turkey and subsequent export to international markets. However, reaching a decision to resume oil flows is not expected at this stage, and further meetings are anticipated.

Sources suggest that the challenges impeding the resumption of exports are predominantly political rather than technical in nature, highlighting the need for political-level agreements to resolve the dispute. Currently, Iraq, the second-largest producer in OPEC, is limited to exporting oil solely through its southern terminals. Approximately 450,000 barrels per day (bpd) of oil exports from the northern fields and Kurdistan remain shut down due to disagreements over authorization.

The federal government of Iraq halted Kurdistan's crude oil exports on March 25, leading companies to reduce or suspend production due to limited storage capacity when oil flows from northern Iraq and Kurdistan via Ceyhan ceased.

While Iraq awaits final approval from Turkey, both sides are yet to reach a consensus on the resumption of exports through the pipeline and the port of Ceyhan. Meanwhile, the Kurdistan Regional Government (KRG) has faced a substantial loss of around $2 billion in oil revenues during the suspension of Kurdish crude oil exports via Turkey, according to estimates.

Sources familiar with the matter indicated that technical-level discussions between Iraq and Turkey were expected to commence early this week to explore the possibilities of resuming oil exports. However, prospects for an immediate restart remain uncertain.

Resolving the political dispute and allowing the resumption of oil flows from Kurdistan holds significant importance for both the economic stability of the region and the broader energy markets. Continued diplomatic efforts and negotiations will be crucial in reaching an agreement that benefits both Iraq and Kurdistan, facilitating the much-needed flow of revenue and contributing to regional stability.