(Bloomberg) -- The US and Iraq discussed the resumption of a major pipeline that can transport oil from the Middle Eastern country to global markets, after the link was shut almost two years ago following regional cost disputes.
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US Secretary of State Marco Rubio and Iraqi Prime Minister Mohammed Shia Al-Sudani “agreed on the need for Iraq” to quickly reopen the project, according to a Feb. 25 statement on the Department of State’s website. The potential restart of the pipeline, which Baghdad has said is likely to resume with about 185,000 barrels a day of initial flows, has weighed on oil prices since Iraq said that it was ready to bring it back online.
The development comes at a delicate time for energy markets just as President Donald Trump has been calling for lower oil prices. Crude on Tuesday fell to the lowest level this year on concerns over economic growth. Iraq has pledged that exports from the semi-autonomous Kurdistan region will remain within its overall OPEC+ quota, but the country, which has a poor record of compliance, hasn’t yet clarified how it will achieve that.
Iraq’s Oil Minister Hayyan Abdul Ghani said this week that the country is in touch with Turkey to discuss technical issues before it can resume shipments through the pipeline that runs to the Turkish port of Ceyhan on the Mediterranean Sea. The project was shut in March 2023 in a payment dispute, and there have been various instances since then when officials have claimed a restart was imminent.
Sudani said in a speech later on Wednesday that his government has worked to find “sustainable solutions to the outstanding issues” with Kurdistan and is looking forward to “opening a new page” with international oil companies operating in the region. He didn’t provide a timeline for restarting the pipeline.
The US also pushed for a restart in the days after the pipe was originally shut.
Rubio and Al-Sudani also discussed the need for Iraq, which imports gas from Iran, to become energy independent, reducing Tehran’s influence, and to continue efforts to prevent ISIS from resurging in the broader region, according to the statement.
(Updates with Iraq prime minister’s comments in the fifth paragraph.)
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