Oil in Global Economy Series: Turkey, Iran, and Iraq to unite to block Kurdish oil trades

Turkey, Iran, and Iraq are preparing block Kurdish oil exports in response to the independence referendum carried out by Kurdistan just weeks ago. On September 25th, Kurdistan held an independence referendum to separate itself as a country from Iraq. Results show, 93 percent of the votes were cast in favour of the independence. Despite reports that the independence referendum would be non-binding, the semi-autonomous Kurdistan Regional Government (KRG) characterized it as binding, although they claimed that a positive result would trigger the start of state building and negotiations with Iraq rather than an immediate declaration of independence. The referendum's legality was rejected by the federal government of Iraq. Iran has said that it will be looking for a win-win deal in Kurdistan. French President Emmanuel Macron has offered to mediate between Iraq and Kurdish governments.

After meeting with Iraqi and Iranian counterparts, Turkish President Recep Tayipp Erdogan said that Iran, Iraq, and Turkey will form a tripartite mechanism and will shut down oil exports from the region. Kurdish Kirkuk oil moves Turkey’s Ceyhan port to reach international markets without interference from Baghdad. Kurdistan produces around 0.6 million barrels of oil per day, almost 15 percent of Iraq’s total output but blockade by these three countries can make the oil completely trapped.

Only good news for Kurdistan is that Russian oil companies have lent a support in its bid to become an independent oil producing establishment. Russian oil major Rosneft has signed a billion dollar pipeline deal just weeks before the referendum. Israel has also lent support to Kurdistan.​

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest