Latest Iraq oil supply deal will test Baghdad
21 July 2025
Commentary
Wil Crisp
Oil & gas reporter
The latest oil supply deal agreed by Baghdad and Erbil will require commitment from both sides to make it work.
The recent agreement has many similarities to previous agreements that were signed between Iraq’s federal government and the Kurdistan Regional Government (KRG), which did not succeed.
Previous agreements have failed to resolve key issues, with one side ultimately accusing the other of reneging on the deal.
In 2014, the Iraqi federal government struck a deal with Erbil to start exporting oil under the framework of the central Iraqi government in return for payments owed by Baghdad.
At the time, the agreement was hailed as the first step in resolving a standoff between Erbil and Baghdad over independent oil exports from Iraq's semi-autonomous region of Kurdistan.
Under the agreement, the KRG agreed to place 150,000 barrels a day of crude oil at the disposal of the central government, which would, in return, pay $500m to the Kurdish government.
The deal fell apart in 2015, with both the KRG and Iraq’s central government accusing each other of not keeping to the terms of the agreement.
A similar deal was also announced in 2012, and also rapidly fell apart.
In order to make sure the new deal succeeds, it is likely that the Iraqi federal government will have to ensure that the Kurdistan region receives prompt payments and real benefits from the cooperation framework.
If this is not the case, then it is likely that the Kurdistan region will look to try and export oil outside of the central government’s systems.
MEED’s June 2025 report on Iraq includes:
> COMMENT: Iraq maintains its pace, for now
> GOVERNMENT & ECONOMY: Iraq’s economy faces brewing storm
> OIL & GAS: Iraqi energy project value hits decade-high level
> PIPELINES: Revival of Syrian oil export route could benefit Iraq
> POWER: Iraq power sector turns a page
> CONSTRUCTION: Iraq pours billions into housing and infrastructure projects
> DATABANK: Iraq forecast dips on lower oil prices
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