Two months left for Iraq and Turkey to reach pipeline deal

• Kirkuk-Ceyhan pact ends on July 27
• Turkey not bound to accept passage
• Negotiations on energy ‘ongoing’

Iraq is suffering a steep drop in its oil exports due to the near-closure of the Strait of Hormuz and needs to reach agreement with Turkey within two months on a major pipeline, analysts say.

The pipeline has carried crude to Europe for decades but the pact governing the 970km conduit linking Kirkuk in northern Iraq to Ceyhan in Turkey ends on July 27. Ankara halted the agreement in July 2025 and said the decision would take effect after a year.

Last year, Turkey presented a more comprehensive draft pact to Iraq, Opec’s second-largest oil producer, covering the pipeline and cooperation in energy and other sectors. Officials in Baghdad said at the time that they were studying the proposal.

Turkey decided to nullify the 52-year-old pact when Iraq was exporting most of its crude from southern fields via Hormuz. Iran has since shut the narrow waterway during its war with the US and Israel.

With the waterway blocked, Iraq’s oil exports are now a third of pre-war levels.

“Turkey is not legally bound to accept the passage of Iraqi crude via that pipeline through its territory from July 27… the two countries need to finalise a new pact,” said Nabil Al-Marsoumi, an Iraqi economics professor.

Turkey’s ambassador in Baghdad told the official Iraqi daily Al-Sabah that the two countries were locked in talks on a new energy deal.

“Negotiations for a new energy agreement between Turkey and Iraq are ongoing, and we would like to conclude these negotiations as soon as possible,” the envoy, Anil Bora Inan, was quoted as saying.

Turkey’s decision to terminate the pipeline pact followed repeated drone attacks on the Kurdistan region’s oilfields. Analysts say the decision was also prompted by Ankara’s desire for a better deal.

Al-Marsoumi said other reasons may include Turkish anger at an order by the International Court of Arbitration in March 2023 that Turkey pay Iraq $1.5 billion for unauthorised crude exports between 2014 and 2018. The court said Ankara had allowed Kurdish authorities in northern Iraq to pump crude without Baghdad’s permission.

“Ankara’s decision could also be linked to the Turkish budget’s shouldering of operating costs for that pipeline, including security services, pumps, engineers, administrators and supervisors,” Al-Marsoumi said.

“These costs were supposed to be covered by oil transport fees, but when the pipeline was shut Turkey received no fees, leading to an accumulated financial burden on Ankara.”

Iraq resumed crude exports of about 200,000 barrels per day (bpd) through the Kirkuk-Ceyhan pipeline in March to offset the halt in shipments via Hormuz.

But that amount is a fraction of the country’s export potential of more than 4 million bpd. In the first four months of 2026, Iraq’s oil exports stood at about 236 million barrels (1.9 million bpd), fetching about $16 billion, according to the State Oil Marketing Organization (Somo).

• Iraqi oil flows through Turkish pipeline – for now
• Much-delayed Kirkuk refinery deal signed by Iraq
• Iraq targets 650,000 barrels per day oil exports via Turkey

Somo said in a report this month that approximately 213 million barrels were exported during that period from southern Iraq, and the rest from the north via the Kirkuk pipeline.

Iraq’s oil exports in the first four months of 2026 were only 58 percent of the year-earlier figure of about 406 million barrels, the report showed.

Analysts said a new pact is also imperative as Iraq is pushing ahead with plans to build new pipelines to export crude via Turkey.

In April, Iraq’s cabinet approved about $1.5 billion for a $5 billion project to construct a pipeline from Basra to Haditha in the western Al-Anbar province, from where it will extend to Turkey, Syria and Jordan.