Both former Prime Minister Haidar Al-Abadi and new Premier Adel Abdul Mahdi said they did not agree with U.S. sanctions on Iran. Abadi sent a delegation to Washington to try to get some exemptions, but the White House was firm. As a result, the Oil Ministry announced that it will no longer be trucking petroleum to Iran.
New Prime Minister Mahdithat Iraq would follow its own interests on U.S. sanctions on Iran, but the reality is that it will likely have to comply with them at least partially. that the Oil Ministry will stop trucking oil from Kirkuk to Iran in November to follow the American sanctions. Iraq is currently sending 30,000 barrels a day to a refinery in eastern Iran.
Ex-PM Abadi worked on an alternative destination for this oil making a deal with the Kurdistan Regional Government (KRG) in October to restart using its pipeline to Turkey. Baghdad has used this route before, but constantly stopped due to budget and political disputes with the KRG. If Mahdi signed off on the agreement it would be a sign that relations are improving between the regional and central government after the Kurdish independence referendum that resulted in federal forces re-occupying the disputed areas of Iraq including Kirkuk.
Originally, the Abadi government attempted to get exemptions from Washington on its sanctions, but that failed. The former PMto the U.S. in August, but in October the Treasury Department on the issue. This was a huge blow to Baghdad as Iran is a major trading partner. According to the Iran-Iraq Chamber of Commerce Iran worth of goods to Iraq in the first half of 2018, a 31% increase from the previous year. This such as electricity and natural gas that fuels power plants. Without this trade Iraq could lose up to 1/3 of its electricity supply. That would have a devastating effect on a country that constantly suffers from power shortages. It’s yet to be seen whether the Mahdi administration will follow all of the American restrictions, but ending the oil deliveries could be a sign of further action.
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Rasheed, Ahmed, “UPDATE 2-Iraq to halt Kirkuk oil exports to Iran, may resume them to Turkey,” Reuters, 10/26/18