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Iraq / Iran Sign Major Oil Swap Deal

Iraq / Iran Sign Major Oil Swap Deal (Kent Weakley / Shutterstock)

In the first oil deal of its kind since Iraqi forces re-established control over Kirkuk in the northern part of the country earlier this year, Iraq has agreed to swap 60,000 barrels of oil per day for Iranian oil. The oil will be delivered by tanker truck to the border area of Kermanshah, where Iran has a refinery. Iran will deliver an equal amount of oil to Iraq's southern ports in Basra.

Iraqi Oil Ministry officials say this is temporary until a pipeline can be built from Kirkuk to Kermanshah. The pipeline could replace the existing export route from Kirkuk via Ceyhan, Turkey and the Mediterranean by pipeline. The Kurds have a lot to lose in this scenario.

Iraqi officials also made clear that they will not tolerate any ambiguity over northern Iraq's political status:

“At a time when the oil ministry welcomes all international oil companies to invest and work in Iraq, it also affirms that oil is a sovereign resource, and therefore all contracts ... should be signed with the federal government and the oil ministry. Anything contrary to that means these entities are liable for all the consequences, legal and financial responsibilities, and damages resulting from that.”

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