Turkey is set to resume operations on a crucial crude oil pipeline from Iraq following a six-month suspension, as announced by Turkey’s Energy Minister, Alparslan Bayraktar, on October 2nd. The announcement was made during the ADIPEC conference held in Abu Dhabi. Upon reactivation, the Iraq-Turkey pipeline is poised to supply almost half a million barrels to the global oil markets weekly.
The pipeline’s operations were initially halted half a year ago subsequent to an arbitration decision by the International Chamber of Commerce (ICC). The ICC mandated Turkey to remunerate Baghdad for unauthorized exports that occurred between 2014 and 2018. Following the ruling, Turkey embarked on maintenance work on the pipeline, which is a significant conduit contributing approximately 0.5% to the global crude supply.
In the interim, Baghdad and Ankara came to an agreement to postpone the recommencement of the pipeline flows until the maintenance assessment, particularly imperative as the pipeline transverses a seismic zone, was finalized. Concurrently, the two nations have been entwined in a legal skirmish regarding arbitration awards. Bayraktar had mentioned in the previous month that Turkey was considering legal proceedings against Iraq, given that the latter has an outstanding enforcement case against Turkey.
Moreover, Bayraktar emphasized Turkey’s history as a steadfast transit route for oil and gas. This pipeline resumption is not only vital for Turkey and Iraq but also stands to have a substantial impact on global oil markets by infusing a considerable quantity of crude oil amidst existing market dynamics.
The decisions and subsequent actions from both countries following the reactivation of the pipeline will be pivotal, especially considering the previous legal and operational challenges. As this development unfolds, it may potentially usher in various economic and geopolitical implications within the region, and perhaps, on a global scale.
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