The story: Iraq's 2027 draft budget may be counting on oil from Iraqi Kurdistan that exists on paper but not necessarily in its pipelines. One of four conditions for federal transfers to the semi-autonomous region is delivering at least 400,000 barrels per day (bpd), more than Kurdish officials and some economists say Erbil can spare. The dispute has stalled the cabinet’s vote, turning a quarrel over revenue-sharing into a question of whether Baghdad’s terms are achievable.

The coverage: On Nov. 7, a federal government source told Shafaq News that disagreements over terms for the Kurdistan region of Iraq scuttled a cabinet session set for that day to approve the 2027 draft budget.

  • Government spokesperson Haidar Al-Aboudi later announced that Prime Minister Ali Al-Zaidi had set aside the cabinet’s Nov. 10 meeting for the draft.

Under the document’s terms, federal transfers to the Kurdistan Regional Government (KRG) hinge on four conditions.

  • These stipulate that Erbil must deliver at least 400,000 bpd to the State Organization for Marketing of Oil (SOMO), hand over non-oil revenues and surplus gas and sign new energy contracts only through the federal oil ministry.

Varying estimates of Iraqi Kurdistan’s oil output have complicated matters.

  • Federal Deputy Prime Minister Mohammed Ali Tamim claimed in a Nov. 1 interview with Iraq 24 TV that intelligence showed the semi-autonomous region’s oilfields producing more than 400,000 bpd, asking “where the additional oil production goes.”

A similar claim came from Ala Talabani, a member of the Sulaimaniyah-based Patriotic Union of Kurdistan (PUK). Talabani alleged in an Oct. 28 appearance on Al-Oula TV that oil was being smuggled via Syria to Turkiye, citing a lawmaker who put the Kurdistan region’s output at 650,000 bpd.

  • The route she described runs through KDP-held Duhok, the only part of the Kurdistan region bordering Syria. A 2024 Reuters report found that oil smuggled to Iran, through crossings in both KDP-held Erbil and PUK-held Sulaimaniyah, had enriched officials in both parties.

The KRG’s natural resources ministry dismissed Talabani’s claims on Oct. 29 as false and misleading, citing international energy consultancy Wood Mackenzie’s estimate of 255,000 bpd. Responding to the dispute on Twitter/X, economist Nabil Al-Marsoumi on Nov. 2 put the KRG’s output at 255,000 bpd.

  • Marsoumi further claimed that 80,000 bpd was consumed locally and 175,000 exported via the Turkish Mediterranean port of Ceyhan. The city hosts the terminal point of the Kirkuk-Ceyhan pipeline, northern Iraq’s primary overland crude outlet.


Online, the reported conditions of the draft budget drew scorn from some, and support from others. Kurdish commentator Hatem Gardi mocked the 400,000 bpd requirement on Nov. 3, asking whether Erbil was expected to import oil from Iran to satisfy the federal government.

  • Prominent Iraqi affairs X account Haidar welcomed the conditions on Nov. 2, accusing the KRG's “ruling family” of withholding revenues while relying on Baghdad to pay salaries.

PUK-affiliated outlet Channel8 reported on Nov. 7 that the federal negotiators were ready to raise Erbil’s share of the federal budget from 12.67% to above 13% and defer the surplus-gas condition to 2028, while raising the oil requirement to 445,000 bpd.

  • Kurdistan24, an outlet affiliated with the Erbil-based Kurdistan Democratic Party (KDP), put Baghdad’s proposed export requirement at 450,000 bpd the same day. Erbil has offered 250,000 to 280,000 bpd, Rudaw, which is also KDP-affiliated, reported on Nov. 8.

The context/analysis: The stipulation for 400,000 bpd from the Kurdistan region is a figure recycled from Iraq’s 2023 budget, and it has outlived the arrangements meant to deliver it.

  • Iraq’s three-year 2023-25 federal budget law made Iraqi Kurdistan’s 12.67% share conditional on those barrels, roughly what the semi-autonomous region had exported independently through Ceyhan.

The new draft keeps the same share and ties the monthly transfers that fund public-sector salaries in the semi-autonomous region to those deliveries. KRG spokesperson Peshawa Hawramani has rejected the share, pressing for at least 14%.

  • In Feb. 2022, the Federal Supreme Court struck down the KRG’s 2007 oil and gas law, a ruling the Kurdistan region’s judicial council rejected that June.

  • Turkiye halted flows through the Kirkuk-Ceyhan pipeline days after the International Chamber of Commerce (ICC) ruled in Baghdad’s favor on Mar. 23, 2023, in an arbitration case over Kurdish crude exported without the federal government’s consent.

The 30-month shutdown helps explain why a target set in 2023 may no longer match what operators can pump. Exports resumed in Sept. 2025 under federal marketing arrangements, but disputes over payments to international oil companies persisted.

  • KRG Deputy Natural Resources Minister Ahmed Mufti told Channel8 on Oct. 17 that 400,000 bpd “cannot be met during 2027” without financial and security guarantees.

Drone strikes on energy sites have compounded the damage. A drone halted production at the Khor Mor gas field in Sulaimaniyah Governorate on the night of Nov. 8.

  • The strike took 2,500 to 2,800 megawatts of generation off Iraqi Kurdistan’s grid, KRG electricity ministry spokesperson Omid Ahmed said.

  • No group has claimed the strike. In June, Zaidi’s government weighed deploying air defenses at Iraqi Kurdistan’s oilfields to coax back operators who had halted output after attacks during the Israeli-US war on Iran.

Beneath the production figures lies a question of trust. Talabani’s and Tamim’s allegations point to a suspicion in Baghdad that Erbil declares less oil than its fields produce.

  • The KRG’s natural resources ministry noted in its Oct. 29 reply that 42 federal oil officials supervise exports to Turkiye. Tracking shipments, however, does not establish total output.

  • The federal oil ministry now plans to station SOMO staff at the oilfields themselves, a Kurdish lawmaker told Rudaw on Nov. 5.


Any compromise may come down to a choice between a fixed volume and all the oil Erbil produces.

  • Rebwar Karim, a federal lawmaker from the Kurdish opposition Halwest Movement, proposed the latter on Oct. 25, under which all of Iraqi Kurdistan’s oil would be sold through SOMO in return for its budget entitlements.

  • A resolution of the output question is also likely to depend on Iraqi Kurdish parties settling their own dispute. The PUK announced on Nov. 5 that it was withdrawing from the KRG, after the KDP reopened the Kurdistan Parliament without it.

Seen together, the draft appears to price in barrels Erbil may be unable to deliver, leaving salary payments tied to production figures the federal government and KRG have yet to reconcile.

The future: The Nov. 10 cabinet session could test how far Baghdad’s reported flexibility on the share and gas extends to the oil volume, before the draft is due in the federal parliament on Nov. 15.

  • Tamim, who has questioned the semi-autonomous region’s declared output, also chairs a ministerial committee reviewing the oil terms. The committee met KDP lawmakers on Nov. 7.

  • A KRG delegation arrived in Baghdad the following day to present its own comments on the draft. The KDP and PUK blocs in the federal parliament had warned on Oct. 13 that they would not back the draft as it then stood.

Away from the cabinet table, a deal may rest on verification and salaries.

  • If Erbil accepts SOMO monitoring at its oilfields, the dispute over figures could narrow. Salaries may be shielded from the dispute in the meantime. Zaidi pledged to KDP lawmakers on Nov. 3 to pay public employees in the Kurdistan region on a par with other state workers.