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Business

Turkish threat to block Kurdistan oil exports drive prices to 2-year high

By Rudaw 26/9/2017
An oil pipeline in the Kurdistan Region. Photo: Farzin Hassan/Rudaw
An oil pipeline in the Kurdistan Region. Photo: Farzin Hassan/Rudaw
ERBIL, Kurdistan Region – Oil prices rose to the highest they have been in over two years on Monday, partially due to concerns about Kurdistan’s independent referendum and a threat from Turkey to block Kurdistan’s oil exports. 

"Brent Crude traded a 27-month high overnight as the Kurdish referendum stokes supply concerns, while strong demand from China also aids sentiment,” said an analyst at Accendo Markets Mike van Dulken, as reported by Business Insider on Tuesday.

Brent Crude reached a high point of $59.02 barrels per day (bpd) after more than two years averaging between $52.00 and $53.00 bpd.

Turkey has threatened that it would close its borders with the Kurdistan Region because of vote for independence from Iraq. Turkish President Recep Tayyip Erdogan said they would also consider blocking Kurdistan’s oil exports.

"The Kurdistan region of Iraq currently produces around 650,000 barrels per day, of which 85% goes through the Turkish pipelines. If the Turks decided to cut crude flows, it would create a shock which markets are currently pricing in,” said Hussein Sayed Chief Market Strategist at FXTM, a leading firm specializing in trading.

"Entrance-exit will be closed" at the Khabur border crossing to the Kurdistan Region, Erdogan said in a speech in which he angrily denounced Monday's referendum as "illegitimate," according to AFP.

He added: "After this let's see... who they sell (their oil) to. The valve is with us. It's finished the moment we close it."

In addition to the pipeline bringing Kurdistan’s oil to Turkey’s Ceyhan port for export to international markets, Turkey is also a key buyer of Kurdistan’s oil and gas, and is an important trading partner. 

In the first half of 2017, $5 billion worth of trade passed between Turkey and Kurdistan, a 20 percent increase over the same period the year before. 

 

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Blue Merchant | 26/9/2017
That means Turkish donkey's have to pay more for their oil, they're shooting themselves in the foot :)
Stewee Guy
Stewee Guy | 26/9/2017
To all our Kurdish people in Kurdistan Basûr, I hope our Muslim neighbors reaction toward the referendum will open your eyes about the real face of Islam. Maybe it's time to convert the 5500 mosques you built into churches, Buddhist temples, Synagogues and Kurdish cultures. PS and Know if it's wasn't of the West and USA our Muslim neighbors would've turned every Kurdish city and town into another Shingal.
Ali Herki | 26/9/2017
Today is our victory day and nobody can do anything to us mr Erdogan and mr Maliki must underestand us and we have been suffering for many years and now is time for equality and selfie determination and dialogue and Kurds will never be under control of Baghdad any more ..1- This is will of our people and our people want to be free and our people are not equal to other citizen in iraq and we are always ready for open dialogue and for a fee democratic Iraq and we want To determine direction on statehood and to administer themselves ..The referendum is also viewed as a way for the Kurds to help legitimize their hold on newly gained territory from the fight against the Islamic State. After nearly three years of war, the Kurdistan Region has gained control over many of the disputed territories in contention with the central government in Baghdad, most importantly the oil-rich city of Kirkuk.
realist | 27/9/2017
kurdish domestic energy consumption is sufficient to make the oil and gas sector profitable for companies working in krg for decades
Non kurd | 28/9/2017
Not a good idea. You must compartmentalize business and politics. Continue the trade which benefits Kurds and Turks. Trade is the best way for Turkey to expand her influence not threats and war.
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