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Geopolitical Score 85 Bullish

Iraq and Kurdistan Seal Deal to Restart Oil Exports Through Turkey

Mar 17, 2026 23:50 UTC
CL=F, ^VIX, USO
Short term

A breakthrough agreement between Baghdad and the Kurdistan Regional Government has paved the way for resumed oil exports via the Iraq-Turkey Pipeline, easing supply disruptions caused by regional conflict and infrastructure attacks. The move is expected to strengthen crude supply and reduce geopolitical risk premiums.

  • Iraq and Kurdistan have reached a deal to resume oil exports via the Iraq-Turkey Pipeline
  • Recent drone attacks have disrupted refinery operations in Erbil and damaged infrastructure near Basrah
  • Iranian forces are alleged to be behind two attacks on oil tankers in Iraqi waters
  • The Strait of Hormuz remains blocked due to regional conflict involving Iran, the U.S., Israel, and allies
  • The pipeline has been a source of political and legal tension between Baghdad and Kurdistan
  • Restarting exports is expected to improve crude supply outlook and reduce market volatility

A long-standing political rift between Iraq’s central government and the semi-autonomous Kurdistan Regional Government has been temporarily resolved, enabling the restart of oil exports through the Iraq-Turkey Pipeline. The agreement comes amid persistent security challenges, including drone attacks that have disrupted refinery operations in Erbil and damaged oil infrastructure in Iraqi waters near Basrah. These attacks, allegedly carried out by Iranian forces, have undermined Iraq’s ability to export crude through the Strait of Hormuz, a key route now blocked due to the ongoing war involving Iran, the U.S., Israel, and regional allies. With the pipeline now poised to reopen, crude supply outlooks are expected to improve, potentially easing near-term market tightness. The development carries implications for global oil markets, particularly for benchmarks like CL=F, as reduced supply uncertainty may lead to downward pressure on prices and lower volatility, reflected in a possible decline in the VIX (^VIX) and energy ETFs such as USO.

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