F Ford Motor Company

By Benoit Faucon and Michael Amon

The central Iraqi government and Kurdish authorities struck a deal Tuesday that would end a standoff over oil sales that had blocked nearly 500,000 barrels a day in exports and sent crude prices rising.

Kurdish authorities said the deal would allow oil exports to begin flowing again through a pipeline from Iraqi Kurdistan to the Turkish port of Ceyhan, where crude often makes its way to Europe. Oil companies that had shut off production in recent days said they were planning to immediately restart operations.

The deal provides a short-term resolution to a long-standing dispute between Iraqi authorities in Baghdad and the semi-autonomous oil-rich region north, where Kurds have governed themselves with a measure of independence since the U.S. overthrew Saddam Hussein in 2003. The Kurds had long marketed and sold oil without Baghdad's consent, sparking a yearslong legal dispute that recently resulted in a ruling in Baghdad's favor from the International Chamber of Commerce in Paris.

Now, Kurdish and central government officials said they would begin serious negotiations to enshrine oil-sales distribution into law.

"The new deal is temporary," said Masrour Barzani, the prime minister of the Kurdistan Regional Government. "It's a crucial step towards ending the long-standing dispute between Erbil and Baghdad, and it creates a positive and safe atmosphere to finally approve the national oil and gas law."

The dispute had led to the closure of a vital oil pipeline in northern Iraq about a week ago had boosted international crude prices close to $80 a barrel and threatened supplies in European countries hunting for alternatives to Russian crude.

The pipeline carries 400,000 barrels daily from Iraqi Kurdistan and 70,000 barrels more from the rest of Iraq, the world's fifth-biggest oil producer. Combined, that amounts to about 10% of Iraq's daily production and about half a percent of global oil demand.

Write to Benoit Faucon at Benoit.Faucon@wsj.com and Michael Amon at Michael.Amon@wsj.com

(END) Dow Jones Newswires

April 04, 2023 08:06 ET (12:06 GMT)

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