MENA Strategic Bulletin – oil flows from the KRG to Turkiye resume; Washington and Ankara reset bilateral ties

By Alice Gower and Amy Stapleton

KRG–Turkiye oil flows resume, but the deal’s durability is in question

Baghdad, Erbil and eight international oil companies (IOCs) have reached a landmark agreement to resume oil exports from the Kurdistan Regional Government (KRG) via the Iraq–Turkiye pipeline. After a two-and-a-half-year halt due to disputes over export authorisation, flows resumed on September 27 at 180,000–190,000 barrels per day (bpd). Output is expected to reach 230,000 bpd by November, with potential to scale up to 500,000 bpd by 2026.

Regional and stakeholder impact

Oil prices fell roughly 3% following the announcement, influenced by the expected addition of at least 137,000 bpd from OPEC+ in November and seasonal declines in global demand.

For Baghdad, the deal reasserts federal control by requiring the KRG to deliver its oil quota to the State Oil Marketing Organisation (SOMO) for export. It also opens the door to resolving long-standing disputes over revenue sharing and contract legitimacy, and advances efforts to finalise the Oil and Gas Law – critical legislation to define the roles of federal and regional authorities in managing energy resources.

For the KRG, the agreement offers economic relief after significant losses from selling crude below Brent prices since the 2023 shutdown. With SOMO handling sales, pricing is expected to align more closely with Brent benchmarks. The deal also alleviates social pressure, as nearly 1.2m civil servants, retirees and welfare recipients had relied on inconsistent budget transfers from Baghdad. Additionally, 50,000 bpd will be retained for domestic use, securing local energy needs. At this week’s Chatham House Iraq Initiative conference, Bayan Sami Abdul Rahman – Senior Advisor to the Prime Minister on Foreign Affairs and Climate Change, KRG – described the agreement as a “win-win-win.”

The US facilitated the deal, with several objectives in mind. First, it hopes renewed Iraqi flows will moderate the impact of cutting Iranian exports to zero under President Trump’s maximum pressure campaign. Second, Washington is seeking a more stable investment environment for US companies. Third, it sees the deal as contributing towards greater regional energy security, including through reducing smuggling and the associated risks – corruption, quality dilution, revenue leakage and heightened security threats.

IOCs have cautiously welcomed the agreement, though Genel Energy and Norwegian DNO ASA are still negotiating payment guarantees for past arrears and have opted out for now.

What’s next

Agreement may face revisions: While the agreement is being hailed as historic, its durability remains uncertain, in large part due to concerns over reciprocal implementation and the impact of Iraq’s upcoming parliamentary elections on November 11. Observers expect low voter turnout amid scepticism that the election will bring meaningful change. The next prime minister will be selected through a lengthy negotiation process and hard bargaining by Shia parties and associated armed groups. Current Prime Minister Mohammed Shia’ al-Sudani  is unlikely to prevail and will be replaced by another compromise candidate. In this context, changes in key ministries or in the governing coalition could see details of the deal revisited.

Short-term gains expected: The resumption of exports will inject much-needed revenue into both Baghdad and Erbil, while adding barrels to global oil markets amid concerns of oversupply. However, the agreement is best viewed as a step forward, not a final settlement.

Trump and Erdogan meet in DC amid cautious reset of US–Turkiye ties

On September 25, Presidents Recep Tayyip Erdogan and Donald Trump met at the White House in what was billed as a reset in bilateral relations. It was Erdogan’s first visit to Washington in six years, with both leaders leaning on their personal rapport and transactional style of diplomacy to advance cooperation where interests converge.

Several major deals were finalised, including a 20-year US LNG supply contract, a civil nuclear cooperation agreement to develop small reactors in Turkiye, a $40bn order for Boeing aircraft, and $10bn in agreements to further boost Turkiye’s civil aviation industry. Trump also expressed confidence that Washington would soon lift its ban on advanced fighter jet sales to Turkiye, including F-35s.

On regional policy, the two sides signalled deeper alignment on Syria and Gaza. Trump and Erdogan reportedly “reached an understanding” on ceasefire terms in Gaza and endorsed the concept of a two-state solution as part of a formula for lasting peace. In a closed-door meeting, officials reportedly discussed domestic reconciliation and reconstruction in Syria, and the complex issue of the future of the Syrian Democratic Forces (SDF).

Observers noted that much of the meeting’s significance lay in its optics. The leaders heaped praise on each other – Erdogan commending Trump for efforts to end the Gaza conflict, and Trump calling Erdogan “tough” and “highly respected.” The tone marked a shift from strained ties under the Biden administration. However, contentious issues remain unresolved, including US sanctions imposed on Turkiye over its purchase of Russia’s S-400 missile system and Ankara’s balancing of ties with Moscow.

Regional and stakeholder impact

The symbolism of Erdogan’s first White House visit in six years may ultimately be more important than its substance. While the previous US administration sought to restore limited pragmatic engagement with Ankara, relations were constrained by disagreements over the Gaza war, Turkiye’s ties to Russia, and US sanctions imposed on Turkiye following its purchase of Russia’s S-400 missile defence system in 2019, among others. The Trump meeting suggests that the current administration is more open to closer cooperation despite these ongoing frictions.

The breadth of issues discussed reflects growing overlap in policy objectives: stabilising the Middle East, particularly Syria, ending the conflict in Gaza, and deterring Russian aggression in the Black Sea and Ukraine. Energy and trade have emerged as central pillars of closer cooperation between the two, underscoring a joint desire for pragmatic cooperation even when significant divergences persist.

Bilaterally, new LNG and nuclear agreements support Ankara’s objective of diversifying energy supplies and achieving greater energy independence. Though Ankara is unlikely to acquiesce to the US request to wean itself off Russian energy, the deals are also a nod towards Washington’s aim of reducing Moscow’s energy revenues as part of its policy of support to Ukraine.

Regionally, cooperation is visible in the reopening of the Iraq–Turkiye pipeline for crude exports from Kurdistan and a $7bn Turkish-US-Qatari energy deal in Syria, which was signed last May. These deals reflect converging objectives underpinned by a Turkish vision of a regional order stabilised by economic integration and regional autonomy and the US objective of delegating security to local partners.

This logic and a joint desire for pragmatic cooperation also point to a more positive trajectory in areas where positions have thus far diverged significantly. For example, in Syria, US and Turkish positions appear to be drawing closer together on the future of the SDF – long backed by Washington but viewed by Ankara as a direct national threat. US officials support an agreement to integrate the Kurdish armed group into Syrian state structures – a move Turkiye backs – while also reportedly putting diplomatic pressure on Israel to de-escalate with Damascus. In Gaza, Ankara has supported the latest US-led ceasefire initiative, despite ongoing differences in policy; for example, the US’s apparent unconditional support of Israel and its vetoes in the UN Security Council, and from Turkiye, its links to Hamas.

Some differences, however, will be harder to resolve, notably Turkiye’s re-entry into NATO’s F-35 programme. Gaining access to F-35s and lifting the 2019 US sanctions on defence sales was a top priority for Erdogan – but he left Washington without a breakthrough.

 What’s next

Diverging positions on SDF to persist: The US is pushing for SDF integration. Last week, the US Ambassador to Turkiye and Syria Special Envoy Tom Barrack said he expects this to happen by the end of the year. However, the issue remains very complex. Trust between Damascus and the SDF is very low. Though the two signed an agreement last March, implementation remains fragile, with the SDF this week enacting forced conscription of men under 40. Ankara remains strictly opposed to an autonomous Kurdish region as part of a unified Syria and has said it will not hesitate to take military action should the SDF not integrate into the Syrian armed forces.

Resumption of defence sales unlikely in short term: Readmission to the F-35 programme and resolution of US sanctions face entrenched congressional resistance, exacerbated by Greek and Israeli lobbying. Though Trump was upbeat about finding a quick resolution, short-term prospects for resuming sales are slim. US law currently bars any transfer of F-35s while the S-400 remains in Turkish inventory. According to reports, multiple lawmakers oppose the sale of advanced fighter tech to Turkiye even if this issue is resolved due to concern that sensitive information could end up in Russia’s hands.

Progress on defence cooperation likely to be slow: This issue is likely to hinder efforts towards bilateral defence industrial cooperation and continue to complicate NATO’s collective ability to effectively deter Russia in the Black Sea – where Turkiye is a pivotal actor. It also has potential to delay the domestic production of Turkiye’s own fifth-generation KAAN fighter jet, a key part of its defence industry export ambitions, and could turn into a domestic political headache for Erdogan.