US pressurizes Iraq to resume Kurdish oil export or face sanctions: Report

US President Donald Trump’s administration is reportedly pressuring Iraq to restart Kurdish oil exports via Turkey, threatening sanctions and warning that the Arab country will suffer the same fate as Iran if it dares defy Washington’s orders.

According to a report published by Reuters, the move aligns with Washington’s pledge to cut Iranian oil exports to zero and reduce Iran’s oil revenues by increasing global supply from alternative sources, including Iraq’s semi-autonomous Kurdistan region.

The resumption of Kurdish oil exports, which have been halted since 2023, is a result of the US's renewed “maximum pressure” campaign against Iran.

The pipeline was halted by Turkey in March 2023 after the International Chamber of Commerce (ICC) ordered Ankara to pay Baghdad $1.5 billion in damages for unauthorized exports between 2014 and 2018.

The report also indicated that Iraqi officials have shown willingness regarding the matter. Earlier this month, the Iraqi Parliament amended its federal budget law to further facilitate the resumption of Kurdish oil exports, stating on Monday that “no obstacles remain to the resumption of oil exports from the Kurdistan Region.”

Additionally, Iraq’s central bank blocked five more private banks from dollar access at the request of the US Treasury last week in an effort to restrict Tehran’s ability to bypass sanctions through its Arab neighbor’s financial system.

Iraq to ban more banks from US dollar transactions: Report

A report shows Iraq’s central bank will ban five more banks from accessing dollar-based transactions.

According to Reuters, eight sources in Baghdad were interviewed regarding the latest decision by Iraqi lawmakers, who pointed out that mounting pressure from the US was a key factor behind Monday’s announcement.

Trump has also ordered Iraq to support his “maximum pressure” policy against Iran by severing economic and military ties with Tehran, putting Baghdad in a difficult position of having to choose between maintaining relations with Tehran and advancing the US president’s oil agenda.

When asked about the administration's pressure on Iraq to resume Kurdish oil exports, a White House official said, "It's not only important for regional security that our Kurdish partners be allowed to export their own oil, but it also helps keep gas prices low."

Neither Iraqi authorities nor Trump’s administration seem to have a detailed plan on how to address the technical issues needed to restart Kurdish oil exports.

Trump intends to help offset some of the loss in global supply caused by the reduction of Iranian crude exports, but Kurdish oil would only cover a fraction of the more than 2 million barrels Iran exports per day.

Experts believe that Iraq’s compliance with US energy policies could contradict its responsibilities as a member of the Organization of the Petroleum Exporting Countries (OPEC+). OPEC has mandated Iraq to reduce its output, forcing the country to navigate between maintaining its ties with the US and adhering to OPEC regulations.

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