Kurdistan defies Baghdad and delivers a million barrels of oil to Israel

Image: Reuters/Amir Cohen
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In a step that cements the impression of a de facto independent Kurdistan, a million barrels of Kurdish oil were delivered to a client in Israel today, despite threats by Baghdad to sue anyone buying it. The US government, fearing another blow to embattled Baghdad, had also worked to prevent anyone from buying the oil.

Reuters broke the story in a scoop, followed a few hours later by a statement on the Kurdish government website. “We are proud of this milestone achievement, which was accomplished despite almost three weeks of intimidation and baseless interferences from Baghdad against the tanker-ship owners and the related international traders and buyers.”

The fate of another million-barrel tanker—the United Leadership, which embarked with Kurdish oil on May 22—remains unclear. But the delivery today in the Israeli port of Ashkelon ends a 10-day drama that began June 10 (Correction: This originally said June 20), when a million barrels of oil were loaded onto a tanker called the United Emblem. In an apparent diversionary tactic, four days later near Malta, the oil was transferred to the SCF Altai, another tanker. All the while, Baghdad treated the oil shipment as an attack on its sovereignty and said it might sue Turkey and file an arbitration request with the United Nations. American officials, meanwhile, warned potential buyers to stay away from it.

That the oil has been sold and delivered confirms the viability of an independent economic lifeline for Kurdistan—a dedicated oil export route through Turkey to the Mediterranean port of Ceyhan. That lifeline offers the potential for political survival.

An independent Kurdistan could be a devastating development for the Iraqi state and a blow to the 1916 Sykes-Picot Agreement establishing the boundaries of the Middle East. But it would be a triumphant moment for the Kurds themselves, after more than a century seeking nationhood.

In a note to clients prior to the story breaking, Citi’s Seth Kleinman said that the Kurds’ capture of Kirkuk on June 14, along with the weakened state of Baghdad and the sale of pipeline crude, had suggested “significant strides” toward de facto independence. “In our view, the final obstacle to de jure independence remains the lack of international support for a Kurdish state, particularly from Turkey, upon which such a state’s economic viability rests as the sole viable route to market oil.”

Kleinman said that if Baghdad continues to resist settling a long dispute over the sharing of oil revenue, “the option of independence may gain support from the international community, including regional powers, raising the likelihood of its eventuality.”

The Kurds, meanwhile, have looked to build upon their gains by loading two more tankers with oil at Ceyhan—one of them the United Emblem.