Kurdistan: Vicious Cycle of Rising Fuel Prices

A gas processing plant run by Dana Gas in the Kurdistan Region. (Photo: Reuters)
A gas processing plant run by Dana Gas in the Kurdistan Region. (Photo: Reuters)
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Kurdistan: Vicious Cycle of Rising Fuel Prices

A gas processing plant run by Dana Gas in the Kurdistan Region. (Photo: Reuters)
A gas processing plant run by Dana Gas in the Kurdistan Region. (Photo: Reuters)

For the past three decades and during the same season, residents of Iraq’s Kurdistan Region suffer from a hike in fuel and oil prices in the local market.

And same as each year, the authorities pledge to resolve the crisis.

However, the problem keeps aggravating. And this year it’s close to becoming a dilemma that might have no solution in the near future.

As the season of rain and cold approaches in the Kurdistan Region, known for its fierce winters, prices of fuel and its derivatives registered a steep increase. The price of one liter of gasoline reached around $1, while in the capital Baghdad and other Iraqi provinces it’s less than 50 cent.

Also, the price of kerosene jumped to $110 and is expected to increase further with the beginning of the snow season.

Erbil Mayor Nabaz Abdulhamid told Asharq Al-Awsat on Wednesday that the rise in fuel prices is mainly due to the lack of direct government subsidies on petroleum products, which subject them to competition and to the principle of demand and supply.

“The repercussions of the severe economic crisis in the Kurdistan Region, caused by the war on ISIS and cutting the region’s financial share from the Iraqi public budget for the past five years, forced the government to eliminate its support for fuel derivatives,” Abdulhamid said.

The mayor added that any increase in the price of fuel is also linked to the price of crude oil in the global markets.

“The government of the Kurdsitan Region is currently coordinating with the Iraqi Oil Ministry to supply residents living in the mountainous areas, with fuel,” he said.

Zubeir Abdulrazak, 39, who sells fuel at an Erbil’s market, said the price of fuel and oil derivatives increased mainly because Iranian authorities prevented the arrival of oil derivatives to the Kurdistan Region due to the dire economic situation inside Iran and the inability of dealers to import fuel from other countries caused by rising costs.



Iraq Holds Kurdish Government Legally Responsible for Continued Oil Smuggling

Kurdish protesters block the road in front of trucks carrying oil in the Arbat area near Sulaymaniyah, Iraq February 23, 2025. REUTERS/Ako Rasheed/File Photo
Kurdish protesters block the road in front of trucks carrying oil in the Arbat area near Sulaymaniyah, Iraq February 23, 2025. REUTERS/Ako Rasheed/File Photo
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Iraq Holds Kurdish Government Legally Responsible for Continued Oil Smuggling

Kurdish protesters block the road in front of trucks carrying oil in the Arbat area near Sulaymaniyah, Iraq February 23, 2025. REUTERS/Ako Rasheed/File Photo
Kurdish protesters block the road in front of trucks carrying oil in the Arbat area near Sulaymaniyah, Iraq February 23, 2025. REUTERS/Ako Rasheed/File Photo

Iraq's oil ministry said on Thursday it holds the Kurdish regional government (KRG) legally responsible for the continued smuggling of oil from the Kurdish region outside the country.

The ministry reserves the right to take all legal measures in the matter, it added.

Control over oil and gas has long been a source of tension between Baghdad and Erbil, Reuters reported.

Iraq is under pressure from the Organization of the Petroleum Exporting Countries to cut output to compensate for having produced more than its agreed volume. OPEC counts oil flows from Kurdistan as part of Iraq's quota.

In a ruling issued in 2022, Iraq's federal court deemed an oil and gas law regulating the oil industry in Iraqi Kurdistan unconstitutional and demanded that Kurdish authorities hand over their crude oil supplies.

The ministry said the KRG’s failure to comply with the law has hurt both oil exports and public revenue, forcing Baghdad to cut output from other fields to meet OPEC quotas.

The ministry added that it had urged the KRG to hand over crude produced from its fields, warning that failure to do so could result in significant financial losses and harm the country’s international reputation and oil commitments.

Negotiations to resume Kurdish oil exports via the Iraq-Türkiye oil pipeline, which once handled about 0.5% of global oil supply, have stalled over payment terms and contract details.