The global price of crude oil has increased after the Iraqi capital, Baghdad, and the Kurdistan Regional Government in Irbil signed an agreement to resume oil exports from the northern region of Iraq. The deal is expected to provide a significant boost to Iraq’s struggling economy, which has been hit hard by the COVID-19 pandemic and falling oil prices.
The agreement, signed on Monday, allows for the resumption of oil exports from the Kirkuk oil fields, which have been shut down since 2017 due to a dispute between Baghdad and Irbil. The dispute was over the management and distribution of oil revenues between the two sides.
Under the new agreement, the federal government in Baghdad will be responsible for managing the oil fields and exporting the oil, while the KRG will receive a 12.67% share of the revenues. The agreement is set to last for one year and can be renewed if both parties agree.
The resumption of oil exports from northern Iraq is expected to add around 400,000 barrels per day (bpd) to Iraq’s overall oil production. This will provide a much-needed boost to the country’s struggling economy, which has been hit hard by the COVID-19 pandemic and the drop in oil prices.
Iraq is heavily dependent on oil exports to fund its government budget and has been struggling to cope with falling oil prices and declining revenues in recent years. The country is also facing significant political and security challenges, including ongoing conflict with ISIS and political instability in the wake of recent elections.
The agreement between Baghdad and Irbil is a positive development for Iraq and the global oil market. The resumption of oil exports from northern Iraq is expected to help stabilize global oil prices, which have been volatile in recent months due to a range of factors, including the COVID-19 pandemic, OPEC+ production cuts, and geopolitical tensions.
The price of Brent crude, the global benchmark for oil prices, rose by 2.5% to $64.50 a barrel following the announcement of the agreement. This is the highest level since January 2020 and reflects the market’s positive response to the news.
The resumption of oil exports from northern Iraq is also expected to have a positive impact on the Kurdish region’s economy, which has been struggling due to a lack of investment and declining oil revenues. The KRG has been facing a severe financial crisis in recent years and has been forced to cut public spending and delay payments to civil servants.
The new agreement is expected to provide a significant boost to the KRG’s finances and help the region to cope with the economic challenges it is facing. It is also likely to improve relations between Baghdad and Irbil, which have been strained in recent years due to a range of political and economic issues.
The resumption of oil exports from northern Iraq is not without risks, however. The region is still facing significant security challenges, including ongoing conflict with ISIS and tensions between Kurdish and Arab communities. There is also a risk that the agreement could unravel if either side feels that its interests are not being adequately represented.
The agreement between Baghdad and Irbil is a positive step forward for Iraq and the global oil market. The resumption of oil exports from northern Iraq is expected to provide a much-needed boost to the country’s struggling economy and help stabilize global oil prices. However, it is important to recognize that there are still significant risks and challenges ahead, and the success of the agreement will depend on both sides working together in good faith.
In conclusion, the agreement between Baghdad and Irbil to resume oil exports from northern Iraq is a positive development for Iraq and the global oil market. The resumption of exports is expected to provide a significant boost to Iraq’s struggling economy and help stabilize global oil prices.
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