Iraq Kurdistan Oil Output Rose Over 50% in June

Oil production from the Kurdistan region of Iraq increased by more than 50% last month, despite violence in the country's north and as logistical problems at the port of Basra cut exports from the south.

The shifting nature of Iraq's oil sector reflects political developments in the country. In a bid to gain greater independence, the Kurdistan Regional Government has taken advantage of its relative stability to increase oil exports in the past two months, infuriating Baghdad which claims sovereignty over the country's natural resources.

Meanwhile, the federal government is struggling to contend with a Sunni extremist insurgency in the north and west, led by the group that calls itself Islamic State, that has shut the country's largest refinery and cut output from the giant Kirkuk field to a trickle.

Production from Iraqi Kurdistan rose to 360,000 barrels a day in June, an increase of 130,000 barrels a day from May, the International Energy Agency said.

After months of failed negotiations with Baghdad over the control of the northern Kurdistan region's oil sales and revenues, the KRG in May began independently exporting tankers of oil sent through a pipeline to Turkey.

According to the IEA, the pipeline--which is currently pumping around 120,000 barrels a day to the Turkish port of Ceyhan--could increase its capacity to at least 300,000 barrels a day before the end of the year. The KRG's minister of natural resources, Ashti Hawrami, has said the region is targeting exports of 400,000 barrels a day by year-end.

However, an immediate further boost to Iraqi Kurdistan's oil output could prove problematic, according to the IEA.

Baghdad remains strongly opposed to the KRG independently exporting its oil and has threatened legal action against anyone involved in the sale or purchase of Kurdish crude. So far, just one of the four tankers the KRG loaded with oil has delivered its cargo.

Meanwhile, barring further technical problems, the IEA expects exports from Iraq's southern port of Basra to rebound this month to 2.6 million barrels a day.

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