The Kurdistan Regional Government (KRG) revised its earlier ban on oil exports to Iran on Thursday allowing registered refineries authorized by the local and central government to resume trucking oil products to their eastern neighbor.

A clarification issued by the KRG’s Ministry of Natural Resources (MNR), dated February 20, states there are two exceptions to the ban issued on February 14.

The first exemption applies to “the petroleum products whose origin of production is based in factories and plants in Kurdistan Region and have a contract with the Kurdistan Regional Government and have an official permit,” it said. 

The second exemption applies to “the petroleum products whose origin of production is in other provinces of the Iraqi federal government if they have official permission to export from the [Iraqi] ministry of oil and we [the KRG] are informed of the permission they have been issued with,” it added.

A source in the oil industry who wished to remain anonymous told Rudaw on Thursday the exemption applies to crude derivatives.

The original ban raised questions about whether the KRG had succumbed to US government pressure to tighten the noose around Tehran and shrink its oil trade to zero. The revisions are likely to anger Washington. 

KRG spokesperson Safin Dizayee on Thursday responded to a question from an Iranian reporter about whether the US sanctions were the reason behind the ban. 

“The Kurdistan Region is part of Iraq and any decision taken by the central government in Baghdad impacts the regional government,” Dizayee said.

“In some regions there is illegal trade in oil and the Kurdistan Regional Government is trying to prevent the unauthorized export of oil to outside Iraq.”

A source close to the Iranians told Rudaw the ban was indeed a result of US pressure on Kurdish officials. A foreign diplomat also confirmed to Rudaw this was the case. 

“The Americans are angry with the Kurds for trading in oil with Iran,” the diplomat said. 

A source in the oil industry who also spoke to Rudaw on condition of anonymity confirmed “American pressure was indeed behind the ban.” 

“No one knew how much oil was being exported to Iran, so when Baghdad and the Americans came on board, the Kurds gave in by issuing the ban,” the source with firsthand knowledge of the Iran oil trade told Rudaw.

Nazim Dabagh, the KRG representative to Tehran, told Rudaw on Thursday by telephone from Tehran that the ban “could be related to the US sanctions” but referred further questions to the Kurdish authorities in Erbil.

Firouz Zarei, economic advisor at the Iranian consulate in Erbil, told an Iranian outlet on February 18 that after repeated enquiries with KRG customs, the finance ministry, and the KRG itself, he did not know why the Kurds had placed the sanctions on petroleum exports to Iran. 

“We have not received a reasonable explanation yet,” he said. 

Zarei said Iran still exports petroleum products to the KRG controlled areas and it is only from the KRG part that ban has been in place.

US officials have repeatedly said they want to bring the export of Iranian oil to zero to force the regime in Tehran to abandon its nuclear ambitions.

The new directive by the KRG is likely to anger US government representatives in the Kurdistan Region who have pushed Kurdish political parties to abide by its sanctions on Tehran after Washington withdrew from the 2015 nuclear deal in May last year.

The KRG started exporting oil and other petroleum derived products such as crude, naphtha, and heavy fuel to Iran back in 2013.

Iran was a lifeline for the Kurds of Iraq when they were under international and Iraqi sanctions in the 1990s. This close and complex history has left a residue of sympathy for Iran.