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Baghdad-KRG stalemate continues over oil disputes

Budget transfers to Kurdistan have been frozen since May as negotiations to restart oil exports falter.
Iraqi Prime Minister Mohammed Shia al-Sudani (center) chairs a Cabinet meeting on July 8, 2025. (Photo credit: Prime Minister's Office)

SULAIMANIYA/BASRA - Over a month after Baghdad cut off critical budget support to the Kurdistan Regional Government (KRG), the crisis remains unresolved because the two sides cannot agree on an array of interlocking issues around how to manage and pay for the Kurdistan region's oil production.

For the past two weeks, negotiators have attempted to hammer out a deal that would restore hundreds of millions of dollars’ worth of monthly federal funding to the KRG, in return for Erbil remitting a portion of its crude output and a larger amount of its non-oil revenues to Baghdad.

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