Written by Antonio Di Giacomo, Senior Market Analyst at XS.com
The Donald Trump administration has intensified its efforts to push Iraq to resume Kurdish crude oil exports, under an implicit threat of economic sanctions. This move is part of the United States’ “maximum pressure” strategy against Iran, aimed at reducing Iranian crude exports to zero. Although Iraqi authorities have denied receiving direct threats, various sources indicate that U.S. pressure was decisive in Baghdad’s announcement of a possible reactivation of the Kurdish crude oil flow.
One of the main reasons behind this demand is the pipeline shutdown connecting Iraqi Kurdistan to Turkey. This interruption has facilitated crude smuggling to Iran, directly challenging U.S. interests in the region. In response, Washington demands that Baghdad halt this illegal flow and restore official exports through Turkey. The goal is to weaken Tehran’s economic and geopolitical influence in Iraq.
However, the resumption of these exports faces several challenges. Tensions between the Iraqi central government and the Kurdish region—particularly regarding payments and control over crude oil revenues—have hindered progress. Additionally, the pipeline’s condition, which requires urgent maintenance, further complicates the restart of operations.
Another significant obstacle comes from international oil companies operating in the Kurdish region. These companies demand explicit payment guarantees before resuming shipments, fearing delays or defaults from Baghdad. The lack of trust between the parties has created an atmosphere of uncertainty that could stall any short-term progress.
Even if the oil flow is successfully resumed, its impact on the global market would be limited. Iraq is subject to production commitments set by OPEC+, which restrict its ability to increase exports significantly. These limits are intended to maintain international oil price stability by preventing an oversupply that could destabilize markets.
Nevertheless, a partial revival of Kurdish exports could help ease some regional geopolitical and economic tensions. For the United States, achieving this goal would strengthen its strategy against Iran, while for Iraq, it would require a delicate balance between meeting international demands and maintaining internal stability.
In conclusion, U.S. pressure on Iraq to resume Kurdish oil exports reflects the complex geopolitical dynamics in the Middle East. Although Baghdad faces several internal and external challenges in resuming these exports, Washington’s interest in curbing Iranian influence remains a key factor. The resolution of this conflict will depend on Iraq’s ability to balance its international commitments with internal political tensions, as global powers closely monitor every move in the international oil market.