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Kurds and Crude
Iraqi Oil Intrigue Off the Coast of Texas

When Iraqi Kurdistan sent a tanker laden with some 1 million barrels of oil—worth more than $100 million at today’s prices—to the U.S., it did so hoping that American companies would take its cargo. Instead, it looks like Uncle Sam will be commandeering the crude at Baghdad’s behest, as a Texas judge approved a request from the central Iraqi government to seize the cargo, currently floating off the coast of Galveston.

How did we get here? The semi-autonomous Iraqi Kurdistan has long agitated for independence from Baghdad, and has sought to use sales of crude to further this ambition. The central Iraqi government maintains it has the exclusive right to negotiate such sales, but last December the KRG began shipping oil to Turkey via pipeline. This didn’t go over well in Baghdad, and for a while it seemed as if Iraqi Kurdistan was content to let its outbound oil sit in storage in Turkey. But the fragmenting Iraqi state and the vicious ISIS offensive allowed the KRG to press its advantage, seizing oil fields in Kirkuk and loading oil onto tankers to find buyers.

But Baghdad still had leverage over the emboldened Kurds, threatening to cut off supplies to countries willing to buy KRG crude. Lacking formal diplomatic relations with Iraq, Israel went ahead and purchased some of this Kurdish oil, but another tanker—the one currently sitting off the coast of Texas—has wandered the seas, searching for a buyer.

When the tanker initially approached American waters, the U.S. Coast Guard declined to seize it or its cargo, to Iraq’s dismay. As Reuters reports, the State Department has “made clear it will not intervene in a commercial transaction.” Private companies—not state-owned oil firms—are buying the cargo. But Baghdad found legal recourse in American courts, and the Texas judge’s ruling orders U.S. Marshals to seize the shipment.

Iraqi Kurdistan’s bid for independence relies heavily on its ability to export oil. This latest saga could deal a significant blow to that ambition.

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  • Boritz

    “…the Texas judge’s ruling orders U.S. Marshals to seize the shipment.”

    You remember that scene in U.S. Marshals where Wesley Snipes jumps off the roof and lands on top of a passing train. &nbspThat was awesome.

    • Dan

      + 1 Sam Gerard

  • FriendlyGoat

    There is no such thing as marshals “seizing” a tanker of crude, except on a very temporary basis. That thing is eventually going to be unloaded—–somewhere.

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