The Kurdistan Regional Government’s (KRG) controversial referendum on independence has sparked fears of a disruption to Iraq’s northern oil exports amid a firestorm of opposition from the central government in Baghdad, neighboring Turkey and Iran, as well as Western powers. Global oil prices scaled two-year highs last week on concerns that the backlash against the September 25 referendum may not only lead to a cutoff in Kurdish oil exports, but may also spark civil unrest in OPEC’s second largest producing country.
Of immediate concern to the oil market are threats by Ankara to halt oil exports from the landlocked semiautonomous Kurdish region, which rely on a Turkish-controlled pipeline to the Mediterranean port of Ceyhan. Approximately 550,000-600,000 barrels per day (kb/d) of oil from the northern region of the country is exported via Ceyhan. Oil exports are the lifeline that provides 80-90 percent of KRG revenue.
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