Iraq’s Oil Deal with Kurdistan Delayed, While U.S. Gas Prices Dip Below $3

Iraq's parliament has ended its current session without finalizing a crucial deal concerning the exports of crude oil from the semi-autonomous Kurdish region. Local media reports suggest that discussions over the deal, initially scheduled for last Thursday, were delayed. The parliamentary session came to a close with no resolution, pushing any decision on the matter to January, when the next session begins.

The topic of Kurdish oil exports has sparked a deadlock, particularly over the issue of compensation that the Iraqi government owes the Kurdish Regional Government (KRG) for the costs of producing and transporting the oil. This disagreement led to Kurdish parliamentarians withdrawing from the discussion. In an effort to resolve the dispute, a Kurdish MP suggested that a specialized international company be tasked with assessing the cost of oil extraction in Kurdistan.

The dispute has been ongoing since the delivery of Kurdish crude oil was suspended over a year ago, after a ruling by the International Chamber of Commerce (ICC) in March 2023, which sided with Iraq. The ICC's decision clarified that Turkey could not authorize Kurdish oil exports without approval from Baghdad. This ruling had a significant impact on international oil companies operating in the region, halting operations until terms were clearly defined. Despite progress, the deal between the two sides has yet to be finalized.

Meanwhile, in the United States, gas prices have dropped significantly. The national average price for gasoline has fallen below $3 per gallon for the first time in over three years. According to GasBuddy data, the average price as of Monday was $2.97 per gallon, the lowest level since 2021. This drop comes at a time when holiday travel is increasing, providing relief for U.S. motorists. Some 35 states are now enjoying gas prices below $3, marking an improvement of seven states compared to the previous month.

The price of oil directly influences gasoline prices, and experts at Standard Chartered predict that U.S. oil production will not experience significant surges in the coming years. While U.S. crude production has increased since the pandemic-era low of 2020, growth has been relatively slow, with forecasts indicating only modest increases through 2025.

As U.S. President-elect Donald Trump prepares to take office, oil markets are showing signs of uncertainty. With the Middle East remaining a key region of concern, experts suggest that the market is in a holding pattern, awaiting more clarity on future policies.