Baghdad Considering Legal Action Against KRG Crude Exports

Two weeks after a 700,000-barrel tanker named Neverland reportedly began its journey towards the US East Coast, Baghdad declared its readiness to challenge the legal validity of Kurdish oil exports in American courts, according to a new report by S&P Global Platts.

Iraq's Oil Ministry will challenge the legality of any shipments originating from the semi-autonomous Kurdistan Regional Government, according to an anonymous senior Iraqi oil ministry official, Oil Price reported. 

Tensions between Erbil and Baghdad have been brewing in recent weeks as the war against the self-proclaimed Islamic State group winds down.

"The Iraqi government prevented three years ago such a cargo to the US by judicial authority in the United States," the official said, referring to the Kurdish cargo on the United Kalavryta, which had been destined for Galveston, Texas, back in 2014. "It is a challenge [to us] and we will challenge that."

Neverland’s final destination has not been confirmed, because the ship turned off its transponder after crossing the Strait of Gibraltar.

Kurdish oil is likely replacing the export reduction pedaled by Saudi Arabia earlier this month to force American refineries to draw from domestic inventories. Baghdad was quick to offer its crude to US importers looking for a substitute to Saudi supplies in a bearish market. Erbil is cashing in on the same opportunity.