The impact of regional conflict on the Kurdistan Region's oil industry

According to KurdPress, the Kurdistan Region's oil industry was severely affected by regional insecurity, drone and missile attacks, and disruptions to export routes during the US-Iran war, and the region's oil production fell by more than 70 percent after the war began. Although oil production and exports have recovered somewhat in recent months, the continuation of security threats and unresolved financial and political disputes between Erbil, Baghdad, and international oil companies have made the recovery process of this sector still fragile.Before the war began on February 28, 2026, the Kurdistan Region’s oil production was around 300,000 barrels per day, and February figures showed production of around 314,000 barrels per day. However, after the conflict began, production fell by more than 70 percent; one of the most important factors in this decline was the concern about drone and missile attacks on the region’s energy facilities.

Following the US and Israeli airstrikes on Iran, many oil companies operating in the Kurdistan Region suspended their activities to prevent possible damage. This situation showed that the region’s energy industry, in addition to political and financial challenges, is extremely vulnerable to security developments in the region.

Before the war, the Kurdistan Region’s energy infrastructure had also been repeatedly targeted.The Kormor gas field was attacked seven times between 2018 and 2022, and the Group of Workers refinery was attacked twice. During the recent war, the Sarsang field, operated by HKN and Shamaran, was attacked on March 5 and April 1, and on March 13, a drone hit the Lanaz refinery in Erbil.

Referring to the consequences of this situation, Kozhin Ahmed, an expert in oil and gas management, said that the US-Iran conflict has had a negative impact on the region’s oil and gas sector, and international companies have suspended their activities due to security concerns. According to him, the halt in production means a decrease in the Kurdistan Region’s income. This is despite the fact that the region has already faced financial difficulties.

The severity of the impact of insecurity on oil companies is also reflected in their production figures.Gulf Keystone’s production at the Sheikhan field fell to 14,600 barrels per day in the first half of 2026, compared to around 44,100 barrels in the same period in 2025. The company suspended operations twice as a precaution in response to security threats, first from February 28 to June 23 and again from July 19 to August 15. DNO’s production also fell from 59,945 barrels of oil equivalent per day in the first quarter of the year to just 5,811 barrels in the second quarter.

The shutdown of oil and gas fields has not only affected the region’s revenues, but also had direct consequences for the electricity sector. The Kormor gas field, one of the region’s main sources of 24-hour electricity, was shut down twice during the war, knocking out between 2,500 and 3,000 megawatts of the region’s electricity generation capacity.The field’s re-shutdown in July, after the collapse of the US-Iran ceasefire, coincided with the resumption of drone attacks on Erbil.

Despite this, the Kurdistan Region’s oil production increased again in August, with the region’s Minister of Natural Resources announcing that production had reached around 220,000 to 250,000 barrels per day. In Iraq, oil exports also exceeded three million barrels per day in early September, the highest monthly export volume during the regional war. However, the continued attacks on tankers in the Strait of Hormuz remain a significant risk to the recovery of Iraqi exports.

In such circumstances, the importance of the northern Iraqi export route through the Kurdistan Region and the Kurdistan-Ceyhan pipeline has increased. The closure of the Strait of Hormuz has shown that Iraq needs alternative routes for its oil exports, and the northern route through Turkey could reduce some of this dependence.Erbil and Baghdad also reached an agreement in March to resume oil exports to Turkey via the Kurdistan Regional Government (KRG) pipeline.

Iraq and Turkey also signed a one-year interim agreement on August 1 to transport oil. The agreement came after the expiration of an old 1973 contract. Kurdistan Regional Government (KRG) oil exports were suspended in 2023 after an international arbitration ruling against Turkey, and resumed in September 2025 after an agreement between Baghdad, Erbil and international oil companies.

Despite the partial recovery in exports, experts say the region’s oil industry remains fragile. Harry Istepanian says that as long as security threats persist and financial disputes between Erbil, Baghdad and international oil companies are not resolved, there is a possibility of further disruptions in exports.In his view, a sustainable revival of the sector requires security guarantees, reliable payments and a stable agreement so that investing companies can resume their activities with confidence.

Shavan Zolal, director of consulting firm Carducci, also stressed that the revival of the Kurdistan oil industry is not just a technical issue, but a political one. This view is consistent with the statements of the Kurdistan Region’s Interior Minister, Reber Ahmed, who announced on September 10 that some oil fields remain closed while they wait for security guarantees and air defense.

In addition to security threats, long-standing disputes between Baghdad and Erbil over the management of oil resources remain one of the main obstacles to the development of the sector. Masrour Barzani, the Prime Minister of the Kurdistan Region, has repeatedly called for the adoption of a new oil and gas law.Iraq’s current oil law dates back to the Saddam era, and a new draft law, drafted in 2007, has yet to be approved by the Iraqi parliament. The Iraqi Federal Court ruled the oil law, which was the basis for independent oil exports and contracts with international companies, unconstitutional in 2022, and independent oil exports were halted in 2023 following an international arbitration ruling.

Meanwhile, Baghdad is seeking to create new oil export routes; plans that could reduce Iraq’s long-term dependence on the Strait of Hormuz, but have also raised concerns in the Kurdistan Region. One such plan involves building strategic pipelines from Iraq’s oil fields to the Fish Khabur region in the north and the Syrian port of Banias on the Mediterranean. Baghdad also plans to increase oil export capacity via Syria and Türkiye’s Ceyhan port.Some in the Kurdistan Region worry that these plans, along with Iraq’s “Development Road” project, will ultimately reduce the role of the Kurdistan Region in Iraq’s energy equation and create new export routes that will reduce Baghdad’s dependence on the Kurdistan-Ceyhan pipeline. However, Mohammad Saleh, a senior fellow at the Foreign Policy Institute, believes that the creation of new routes will not necessarily make the Kirkuk-Kurdistan-Ceyhan pipeline less important. According to him, the Turkish route remains important due to the stability of the country, while the potential instability of Syria could make the Turkish route more risky.

Overall, the US-Iran war exposed the structural vulnerability of the Kurdistan Region’s oil industry.The crisis has shown that the region’s oil production and exports depend not only on prices and technical capacities, but also on regional security, relations between Erbil and Baghdad, the behavior of international companies, and the state of oil transportation routes. Although production and exports are increasing again after a sharp decline, the continuation of attacks, instability around the Strait of Hormuz, and the unresolved disputes between Baghdad, Erbil, and oil companies could stop this trend again.

From this perspective, the regional conflict for the Kurdistan Region is not only a short-term threat to oil production, but also affects the future energy equations of the region, especially as Baghdad is simultaneously trying to create alternative export routes.However, the creation of these routes will require investment and several years of time, and in the short term, the Kurdistan Regional Government-Ceyhan pipeline will remain one of the most important routes for Iraqi oil exports outside the Strait of Hormuz.

German Center for Kurdish Studies