Iraq’s Rising Oil Exports Add Risk to the Global Oil Market

By Mohanad Yakout, Senior Markets Analyst, Scope Markets

Amid recent developments, global oil market attention is turning to Iraq’s increasing oil exports, particularly via the Turkey pipeline from Kurdistan, following a preliminary agreement between the central government in Baghdad and the Kurdish region to resume exports of around 230,000 barrels per day, which had been halted since March 2023. This shift comes as part of Iraq’s broader effort to boost production after a relaxation of some commitments under the OPEC+ agreement and to strengthen the country’s financial revenues. As a result, Iraq’s oil exports rose to approximately 3.4 to 3.45 million barrels per day in September, up from around 3.38 million barrels in August.

However, despite the clear benefits of this move in terms of revenue generation and improved financial liquidity, multiple risks loom over the global oil market as the end of 2025 approaches. First, there’s the risk of oversupply, especially if the Kurdistan pipeline returns to full capacity without alignment with global demand, which is expected to remain relatively weak due to global economic conditions and the accelerating shift toward renewable energy and electric vehicles.

Second, there are logistical, legal, and political risks related to the ongoing dispute between Baghdad and Erbil over export contracts, revenue sharing, or obligations to foreign companies. Any delays or sudden stoppages could disrupt pipeline flows and undermine investor and market confidence.

Third, price volatility remains a major concern. Geopolitical tensions in the Middle East or the imposition of sanctions on supplies from countries like Russia could trigger sharp market swings, especially if news is conflicting or if the implementation of agreements faces obstacles.

In short, the oil landscape for Q4 2025 looks highly volatile. While the increase in exports offers an opportunity to bolster Iraq’s financial position and improve revenues, the success of this strategy depends on legal and political stability, infrastructure reliability, alignment with global supply and demand, and effective risk management. If these factors are handled properly, Iraq stands to gain significantly, but if markets are caught off guard by any serious disruptions, prices could fall, and market tensions may rise.