Tanker owners could get a spring boost to Mediterranean volumes after Iraq signalled it would reopen an oil pipeline that has been shut for a decade.
Reuters cited a government official as saying that the country is repairing the 350,000 barrel per day link from the Kurdish-Iraqi city of Kirkuk to Ceyhan in southwest Turkey that was closed in 2014 following repeated attacks by Islamic State militants.
The 960-km line, which once handled about 0.5% of global supply, could be operational again by the end of April.
The facility is an alternative route for the export of northern Iraqi crude.
The other pipeline for sending Kurdish oil to Ceyhan was closed by Iraq in March 2023 following a dispute with Turkey over tanker exports dating back to 2014.
The 2023 closure added to a shortage of sour crude, particularly west of Suez, shipbroker BRS said.
A reopening of the Kirkuk pipeline could inflame tensions with Iraq’s Kurdistan Regional Government, which relies almost entirely on crude revenue.
Reuters said Iraq will require oil companies to deal directly with the national government in Baghdad when the pipeline is again operational.
“However, considering that the pipeline was historically subject to regular attacks of sabotage by the Kurds, these could once again resume if the payment dispute concerning Kurdistan Regional Government oil is not resolved swiftly,” BRS added.
US broker Poten & Partners said any resumption of exports from northern Iraq would increase the availability of oil in the Mediterranean and boost employment opportunities for aframax and suezmax tankers in the region, “especially since these cargoes represent additional barrels, not replacement volumes”.
News of the pipeline repairs came from Iraqi deputy oil minister Basim Mohammed.
“Repair works are ongoing and a major crude pumping station with storage facilities has been completed. The pipeline is likely to be operational and ready to restart flows by the end of this month,” he told Reuters.
Iraq closed the only other working link last year after the International Chamber of Commerce ruled in its favour in arbitration relating to a case filed against Turkey in 2014.
Turkey was alleged to have allowed tankers to load Iraqi oil in Ceyhan without the required authorisation of Iraq’s oil ministry.
The verdict required Turkey to pay $1.5bn to Iraq for barrels loaded between 2014 and 2018.
Talks to resume shipments using this link have stalled.
