The Iraqi Government is reportedly close to reaching an agreement with the Kurdistan Regional Government (KRG) to resume oil exports from Kirkuk through KRG’s pipeline in view of the US sanctions targeting Iran’s crude exports.
The disputed oil-rich region is located 238km north of Baghdad and has largely remained cut off from global oil markets for more than a year, the Financial Times reported.
Exports from Kirkuk have been stopped after Iraq took control of the region from the Kurdish authorities last October.
If the authorities agree on the deal, around 400,000 barrels of oil per day could be added to international markets.
Iraq intends to close the agreement this month in the face of growing pressure from the US to increase oil exports.
Washington has been exerting pressure on its allies to raise production and increase exports in an attempt to prevent oil prices from rising further after curbs have been put in place on crude imports from Tehran.
Brent crude future slipped into a bear market after decreasing more than 1.5% to trade below $70 per barrel on 9 November for the first time since April. The contract fell by more than 20% since last month.
Three unnamed sources have told the publication that although talks on restarting exports have been continuing since last year, they have intensified in recent weeks.
One of the sources added that the previous Iraqi Government reached a provisional agreement with the KRG, but the deal could not be finalised.
The pipeline was bought by Russian oil and gas firm Rosneft.
The KRG’s ministry of natural resources stated that the pipeline’s daily capacity has been increased from the existing 700,000 barrels to one million barrels following an upgrade.