Turkey, Iraq to Sign One-Year Deal to Keep Key Crude Oil Pipeline Operational

Turkey and Iraq will sign a one-year agreement within days to continue operations for the critical crude oil pipeline connecting the two nations, according to a statement from Turkish Energy Minister Alparslan Bayraktar on Thursday. The new deal ensures the continued flow of Iraqi oil to Turkey’s Ceyhan port on the Mediterranean coast.

Agreement Nears Finalization

Speaking during an official visit to Baghdad, Minister Bayraktar confirmed the deal was in its final stages ahead of the current agreement's expiration. The existing pact is scheduled to end on July 27.

"We have brought the agreement that will cover the next 12 months to the final stage. We aim to sign it in the coming days," Bayraktar said in a statement. He added that he held a productive meeting with Iraq's Oil Minister, Basim Mohammed, to discuss broader energy cooperation.

Context of Recent Disruptions

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The pipeline's stability is significant for regional energy markets, as it was previously shut down for two and a half years. Operations only resumed late last year following a lengthy dispute.

The shutdown was prompted by an international arbitration court ruling that ordered Ankara to pay $1.5 billion in damages to Baghdad. The penalty was for unauthorized exports of crude oil that Turkey received between 2014 and 2018.

Implications for Energy Markets

This one-year extension provides near-term certainty for a key oil export route from northern Iraq to international markets. The diplomatic efforts were underscored by Bayraktar's meeting with Iraqi Prime Minister Ali al-Zaidi during the visit, signaling the strategic importance of the energy relationship for both countries.