Turkey terminates the Iraq–Turkey Crude Oil Pipeline Agreement, effective July 2026, following the standard notification protocols. The move deepens the crisis facing the Kurdistan Region’s oil sector, whose independent exports through the pipeline have been halted since March 2023. That suspension followed Iraq’s arbitration win at the Paris-based International Chamber of Commerce, which ruled that Turkey had breached Baghdad’s exclusive authority over national oil exports.

Context: The original pipeline agreement dates back to August 1973 and has been renewed every 15 years, most recently in 2010. By precedent, a new renewal would have been due in 2025 — but instead of extending the deal, Ankara has now opted for full termination.

Iraq currently connects to Turkey through two main pipelines. The first is the Kirkuk–Ceyhan pipeline, under Baghdad’s control and recently refurbished on the Iraqi side. The second is the KRG–Turkey pipeline, which began operations in 2014 and feeds into the same infrastructure but originates in fields controlled by the Kurdistan Regional Government.

The pipeline has been dormant since March 2023, when the ICC arbitration court ruled that Turkey had violated the 1973 agreement by enabling independent KRG exports. Since then, technical readiness has not translated into political agreement — and multiple efforts to restart KRG oil flows have failed.

Analysis: Baghdad had a two-year window to renegotiate terms, yet no new framework emerged. Instead, tensions deepened after the $1.5 billion arbitration ruling against Turkey in 2023 for violating the original agreement by facilitating KRG oil exports. That decision strained Ankara–Baghdad energy ties and cast a long shadow over the pipeline’s future.

The primary casualty remains the Kurdistan Region, whose energy sector now faces compounding crises. Recent drone strikes have devastated KRG production capacity, slashing output from nearly 300,000 to about 140,000 to 81,000 barrels per day. While the pipeline has remained dormant since March 2023, its termination further weakens the prospect of resumed KRG oil exports—effectively cementing Erbil’s energy isolation. Kirkuk crude exports through KRG infrastructure had already ceased in 2017 when Baghdad recaptured the fields, but the KRG pipeline had remained the region’s only potential gateway to international markets.

Meanwhile, Iraq has moved ahead with infrastructure upgrades, completing renovations on its side of the Kirkuk–Ceyhan line — suggesting Baghdad had expected the agreement to continue. Yet the termination may not be an end in itself. It could signal the start of broader energy negotiations tied to the proposed “Development Road” — a strategic corridor envisioned to link Basra to Europe through Turkey, incorporating rail, road, and potentially new oil and gas pipelines.

Still, the near-term reality remains unchanged: the KRG has no alternative export route, Baghdad retains legal leverage, and Ankara appears to be positioning for a more centralized deal — one that may bypass Erbil altogether. Yet given the uncertainties in the region, the long-term picture is far from settled. Despite Ankara’s formal posture, the close relationship between Erdoğan and the Barzanis leaves room for quiet renegotiation. Whether this is the end of the KRG pipeline story or simply a tactical reset remains unclear.