The Kurdistan region of Iraq has been considered the Holy Grail of oil exploration for around a decade now. Oil companies of all sizes have struggled to get their hands on acreage within the region, where oil literally seeps out of the sand.
Until a few weeks ago oil production from the region was restricted, as oil could only be moved out of Kurdistan by truck, or sold into the domestic market at a significant discount to Brent.
However, a newly constructed pipeline has allowed producers to transport crude from Iraqi Kurdistan in Turkey, where it can be pumped onto tankers and sold into the international market at international prices.
The problem is, no one wants the oil. Iraq and Kurdistan are still trying to reach an agreement over oil sales from the region and until a conclusion has been reached, the international community is keeping its hands clean.
The United Leadership oil tanker was the first tanker to be loaded with Kurdish crude, 1 million barrels to be exact, at the end of May. The tanker set course for the U.S. Gulf Coast but reversed course south of Portugal with a new destination, Gibraltar for orders.
According to the The U.S. State Department, the US does:
“…not support the export or sale of oil absent the appropriate approval of the federal Iraqi government…”
After heading towards Gibraltar, United Leadership tried to unload its cargo at the Mohammeddia refinery in Morocco, where it was swiftly turned away.
Originally, the oil was reportedly destined for Italy or Germany but as of yet, the tanker has not made a move to either country.
The Iraqi government has referred the oil on board as “stolen and smuggled”, warning that any private firms buying the crude would be liable to legal action.
So, it seems that Kurdistan’s oil boom is still struggling to get off the ground.
Source: Italy Warns Firms Against Buying Kurd Oil After Iraq Threat