US, Iraq Push for Resumption of Key Oil Pipeline Amid Global Market Concerns

The United States and Iraq are actively engaged in discussions regarding the resumption of a major oil pipeline that can transport crude from Iraq to global markets, Bloomberg reports.

The pipeline, a critical link in the region’s energy infrastructure, has been shuttered for nearly two years due to regional cost disputes.

According to a statement released by the Department of State on February 25, US Secretary of State Marco Rubio and Iraqi Prime Minister Mohammed Shia Al-Sudani “agreed on the need for Iraq” to quickly reopen the project.

The potential restart of the pipeline, with initial flows projected at approximately 185,000 barrels per day, has already impacted oil prices, placing downward pressure on the market since Iraq signaled its readiness to bring it back online. This development comes at a sensitive time for energy markets, particularly as President Donald Trump has been advocating for lower oil prices. On Tuesday, crude oil prices fell to their lowest level this year amid concerns about global economic growth.

While Iraq has pledged that exports from the semi-autonomous Kurdistan region will remain within its overall OPEC+ quota, the country’s historically inconsistent compliance record has raised concerns about how this will be achieved.

Iraq’s Oil Minister, Hayyan Abdul Ghani, stated this week that ongoing discussions with Turkey are addressing technical issues necessary for resuming shipments through the pipeline, which connects to the Turkish port of Ceyhan on the Mediterranean Sea. The pipeline’s shutdown in March 2023 stemmed from a payment dispute, and numerous previous claims of an imminent restart have failed to materialize.

In a speech delivered on Wednesday, Prime Minister Sudani emphasized his government’s commitment to finding “sustainable solutions to the outstanding issues” with Kurdistan and expressed hope for “opening a new page” with international oil companies operating in the region. However, he refrained from providing a specific timeline for the pipeline’s resumption.

The US has been actively advocating for a restart of the pipeline since its initial closure.

Beyond the pipeline, Rubio and Al-Sudani also discussed the importance of Iraq achieving energy independence, reducing its reliance on gas imports from Iran and thereby diminishing Tehran’s influence. They also addressed continued efforts to prevent the resurgence of ISIS in the region, according to the State Department statement.