Baghdad and Irbil are in a new dispute over the latter signing two new natural gas deals. The central government has retaliated financially and verbally. The latest example was the Oil Ministry accusing the Kurdistan Regional Government (KRG) of oil smuggling.
On June 5 the Oil Ministry said that Kurdistan was smuggling oil. It threatened legal action against the region. The Ministry went on to say that the KRG’s oil production meant that Baghdad had to cut its own output to meet OPEC+ quotas.
The KRG’s Natural Resource Ministry rejected Baghdad’s accusations. It then turned around and said that the central government is the one illegally selling petroleum. It also said that it was delivering its oil to refineries run by the Oil Ministry rather than smuggling it. All of these are actually true. Both the regional and central government have been smuggling for years.
This all started in May when Kurdistan signed natural gas deals with HKN Energy and WesternZagros. The Oil Ministry immediately said that was illegal, sued the KRG and then Baghdad said it would not send monthly budget payments.
The Iraqi government has made these accusations before. During the second Maliki administration it did the same thing and over the same issue. Then Baghdad was against the Kurds following an independent oil strategy and claimed they were smuggling as part of that policy. Just like then the central authorities cut off budget payments and sued the regional government in retaliation. Kurdistan fell into massive debt, faced demonstrations from its public workforce that it could not pay, lost most of its court cases and eventually had to concede on many issues.
This raises the question of why the Kurds decided to try this once again as it has lost in the past and suffered the consequences.
SOURCES
Asharq Al-Awsat, “Iraq Holds Kurdish Government Legally Responsible for Continued Oil Smuggling,” 6/5/25
Rudaw, “Erbil rejects oil smuggling accusations as tensions with Baghdad escalate,” 6/5/25
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