Kurdish oil ship in search of a port

Amid a dispute over exporting oil between Iraq and the Kurdistan Region, the latter has shipped its first cargo of independently exported oil, but may have trouble finding a buyer amid threats from Baghdad.

al-monitor Tanker trucks wait to be loaded at Taq Taq oil field in Erbil, Sept. 5, 2012. Photo by REUTERS/Azad Lashkari.

Topics covered

turkey, sanctions, oil revenue, oil contracts, oil, kurds, kurdistan regional government, iraq

Jun 5, 2014

The Kurdish administration in northern Iraq and the Baghdad government are at loggerheads over oil exports. The tanker carrying the first cargo of independently exported oil from northern Iraq is crisscrossing the Mediterranean without any clear destination or buyer, amid threats of legal action from Baghdad.

According to online monitoring services, the ship — the United Leadership — was first seen heading to the Atlantic, its destination, the Gulf of Mexico. On Monday [June 2], however, the vessel changed route to Morocco’s Muhammadiyah region following tough remarks the previous day by Iraqi Deputy Prime Minister Hussein al-Shahristani.

The Baghdad government has declared illegal the sale of oil exported from northern Iraq to Turkey, and vowed international legal action against companies or entities who buy that oil. It has also warned it would slap its own sanctions on any buyers, be they entities or individuals.

Price plunges 50%

According to oil industry sources contacted by Milliyet, the price of the ship’s cargo has plummeted amid the tensions. The crude oil price at international markets is $110 per barrel at present. Accordingly, the ship’s cargo, loaded at Turkey’s Mediterranean oil terminal, Ceyhan, was calculated to be worth $115 million. But now the sellers are said to be ready to sell the cargo for $56 million.

US warnings

The United States has also objected to the Kurdish regional administration exporting oil independently from Baghdad. US State Department spokeswoman Jen Psaki has stated that Washington does not support oil exports without approval of the Iraqi federal government and is concerned about such exports taking place.

Maliki: Turkey’s actions unacceptable

Iraqi Prime Minister Nouri al-Maliki has denounced Turkey for its involvement in [efforts at] selling the northern Iraqi oil. In remarks to Iraqiya TV, Maliki said Turkey acting as intermediary in taking the Kurdish oil to international markets without Baghdad’s consent was unacceptable. He described those sales as trampling on Iraq’s honor.

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