Amid a shifting energy landscape, global oil market attention is turning to Iraq’s increasing oil exports, particularly via the Turkey pipeline from Kurdistan. This follows a preliminary agreement between Baghdad and the Kurdish regional government to resume exports of approximately 230,000 barrels per day, halted since March 2023.
“This shift comes as part of Iraq’s broader effort to boost production after a relaxation of some commitments under the OPEC+ agreement and to strengthen the country’s financial revenues. As a result, Iraq’s oil exports rose to approximately 3.4 to 3.45 million barrels per day in September, up from around 3.38 million barrels in August,” said Mohanad Yakout, Senior Markets Analyst at Scope Markets.
Revenue Up, But Risks Loom
While the increase signals a positive trend for national revenues, Yakout warns that significant risks are emerging for the broader global oil market, particularly as Q4 2025 approaches.
“Despite the clear benefits of this move in terms of revenue generation and improved financial liquidity, multiple risks loom over the global oil market as the end of 2025 approaches,” he noted.
Oversupply Concerns
The first and most immediate threat is oversupply, especially if the resumed exports are not aligned with global demand trends.
“First, there’s the risk of oversupply, especially if the Kurdistan pipeline returns to full capacity without alignment with global demand, which is expected to remain relatively weak due to global economic conditions and the accelerating shift toward renewable energy and electric vehicles,” Yakout explained.
Legal and Political Volatility
A second area of concern lies in the legal and political tensions between Baghdad and Erbil, particularly around revenue sharing, contract obligations, and control of exports. “There are logistical, legal, and political risks related to the ongoing dispute between Baghdad and Erbil over export contracts, revenue sharing, or obligations to foreign companies,” said Yakout. “Any delays or sudden stoppages could disrupt pipeline flows and undermine investor and market confidence.”
Market Volatility and External Shocks
Finally, price volatility remains a critical issue — especially in a region as geopolitically sensitive as the Middle East. “Geopolitical tensions in the Middle East or the imposition of sanctions on supplies from countries like Russia could trigger sharp market swings, especially if news is conflicting or if the implementation of agreements faces obstacles,” Yakout emphasized.
Q4 Outlook: Stability Will Be Key
As 2025 enters its final quarter, the outlook remains fragile. While Iraq’s oil strategy has the potential to enhance national revenues, its success hinges on a delicate balance of market alignment, political cohesion, and infrastructure readiness. “While the increase in exports offers an opportunity to bolster Iraq’s financial position and improve revenues, the success of this strategy depends on legal and political stability, infrastructure reliability, alignment with global supply and demand, and effective risk management,” Yakout concluded. “If these factors are handled properly, Iraq stands to gain significantly — but if markets are caught off guard by any serious disruptions, prices could fall, and market tensions may rise.”
