Iraq's Cabinet said Tuesday that further payments are contingent on the KRG transferring most of its oil production and non-oil revenue to Baghdad.
U.S. designation of a key oil sector logistics provider highlights sanctions risks, prompting Iraqi measures to combat corruption in fuel trading.
Iraqi oil sales increased in July, even as the fate of a deal to restart northern exports via Turkey remains uncertain.
Operational disruptions caused by the Israel-Iran war do not appear to have affected Iraqi crude output, which was virtually unchanged from May to June.
Federal financial transfer signals political will to implement an agreement that could result in re-starting northern oil exports, though further hurdles remain.
The agreement will now expire in July 2026, raising new questions about the future of oil exports from northern Iraq and the Kurdistan region.
A new deal for oil and budget cooperation between Baghdad and Erbil faces significant challenges to implementation, including crippling attacks on Kurdistan's oil sector.
Drones struck Tawke and Ain Sifni on Wednesday, marking three consecutive days of attacks on Kurdistan oil fields.
Attack on HKN-operated Sarsang field coincides with the company's signing of a preliminary upstream deal with the federal Oil Ministry.
Longtime energy MP talks about U.S. pressure on Baghdad and Erbil, the blame he places on KRG oil tactics, and the upside of the sitting oil minister entering elections.
Budget transfers to Kurdistan have been frozen since May as negotiations to restart oil exports falter.
