Two oil officials familiar with the matter stated that Iraq has requested the Kurdistan Regional Government (KRG) to transport 100,000 barrels of crude oil per day from its Kirkuk oil field to Turkey's Ceyhan port. The officials confirmed that Iraq's Oil Ministry sent the request via a letter to the KRG earlier last week.

The Kurdistan Pipeline Company manages the main oil pipeline in the Iraqi Kurdish region. This pipeline carries crude from northern Iraq to a border point, where it connects with the Iraq-Turkey pipeline.

According to the officials, Baghdad will cover the transit fees and may increase the volume depending on product availability. They added that the KRG has not yet responded to the request.

The officials indicated that this move aims to "reduce the significant loss of Iraqi oil revenue caused by disruptions in southern crude exports." A KRG spokesperson, Peshawa Hawramani, did not immediately respond to a request for comment.

Iraqi sources reported that due to the war with Iran preventing oil exports via the Gulf, production at Iraq's main southern oil fields—where the majority of the country's oil is produced and exported—has dropped from 4.3 million barrels per day to 1.3 million barrels per day, a 70% decline.

The Kirkuk oil field in northern Iraq currently produces around 350,000 barrels per day. All of this oil is supplied to refineries in northern Iraq, including the largest refinery, the Baiji refinery.

An Oil Ministry source stated that the ministry will transport crude from its southern fields to Baiji to compensate for the Kirkuk oil being diverted to Ceyhan.

Given the Iraqi government's reliance on oil revenue to fund nearly its entire budget, the production decline and reduced exports could further strain its fragile fiscal situation.