It seems that international oil companies operating in the Kurdistan region are obstructing the implementation of the instructions of the central administration in Baghdad regarding the production cuts agreed upon in the OPEC+ alliance.

At a meeting of OPEC+ producers last month, Iraq pledged to reduce its production to 3.905 million barrels per day in September 2024 to compensate for the high production in previous periods (4.27 million barrels per day in August 2024), while Iraq’s share is only 4 million barrels per day.

In implementing these production cuts, Iraq relies on reducing the production of fields under the control of the central government in Baghdad, as well as fields outside its control in the semi-autonomous Kurdistan region.

The Iraqi government believes that in order for Iraq’s production to be in line with the OPEC+ alliance decisions, oil production from Kurdistan must be reduced by 130,000 barrels per day. However, there are no indications of any reductions in oil production from Kurdistan.

Iraqi Prime Minister Mohammed al-Sudani says contractual and financial disputes with international oil companies based in Kurdistan are an obstacle to resuming oil exports via the Iraq-Turkey pipeline. He says the Kurdish oil sector contracts are unconstitutional and that the 2023-2025 federal budget law stipulates that 400,000 barrels per day of Kurdistan’s production should be delivered to the federal government in exchange for a fixed payment of $6.90 per barrel.