Drone escalation: Is the Kurdistan Region's economy at risk?

Shafaq News

17-07-2025

Shafaq News
A recent wave of drone attacks has dealt a serious blow to the Kurdistan Region's oil sector, triggering shutdowns and placing vital infrastructure under growing strain. The most recent incident occurred early Thursday, when an explosive-laden drone struck the Bahrka subdistrict in Erbil province. No casualties were reported.
The night before, another drone targeted the Baadre oil field in Sheikhan district, sparking a large fire and forcing a halt in operations. That strike followed a series of earlier attacks in Duhok province, where the Tawke and Bishkabour oil fields—both operated by Norwegian firm DNO—were hit, along with a US-managed site in Malperkeh.
While no injuries have been reported across the incidents, damage to equipment and facilities has been confirmed, raising concerns about operational safety and infrastructure resilience.
These attacks were preceded by repeated strikes on the Khurmala and Sarsang fields on Monday, bringing the total number of drone incidents to at least nine in less than a week. On Tuesday morning, three additional sites—Peshkabir, Tawke, and a Hunt Oil installation—came under fire within a 90-minute window, deepening the disruption to production.
Output in Freefall
In the aftermath of the strikes, operators including DNO ASA and Gulf Keystone Petroleum moved swiftly to suspend operations. Tawke, Peshkabir, and Shaikan—the Kurdistan Region's most productive oilfields—remain offline.
Acknowledging the gravity of the threat, the Kurdish Ministry of Natural Resources called on all operators to conduct urgent safety assessments, as fears over infrastructure vulnerability continue to mount.
Before the attacks, oil production in the Kurdistan Region hovered between 285,000 and 300,000 barrels per day in 2024. The strikes have cut output by an estimated 140,000 to 150,000 barrels daily—nearly half of the total volume.
Peshkabir, producing roughly 49,500 barrels per day, alongside Tawke at about 29,150 and Sarsang at approximately 30,000, collectively contribute over 108,000 barrels daily. These three fields alone represent close to 6% of Kurdistan's projected 1.8 million barrels per day output this year.
Oil revenues remain the cornerstone of the Region's economy, generating more than $4 billion last year, with nearly $2 billion retained after deductions. Based on current Brent prices, a daily loss of 150,000 barrels equates to roughly $3.8 million in missed income—amounting to over $1.1 billion per month. Even a more cautious estimate of 140,000 barrels per day results in a weekly shortfall of around $70 million, intensifying pressure on Erbil's budget.
'This is a direct hit to Kurdistan's economy,' oil expert Dr. Kovend Sherwani told Shafaq News, emphasizing that some fields have ceased production entirely and the full extent of damage remains under assessment.
Sherwani also interpreted the timing of the attacks as a calculated message, stressing that 'They come just days after Baghdad signed a deal with an American company to develop Iraq's Hamrin field. It's a hostile signal against foreign, especially US, investment in Iraqi oil.'
Voices of Outrage
The Association of the Petroleum Industry of Kurdistan (APIKUR) warned that the attacks endanger both Iraqi and expatriate workers, stressing that the authorities in Baghdad and Erbil to enhance protection for personnel and critical infrastructure.
On the political front, the Kurdistan Region Presidency described the strikes as a serious threat to sovereignty and investment. 'This is a dangerous escalation that targets the Region's stability and its partnerships,' the presidency noted, urging Baghdad to take decisive steps.
Iraq's presidency echoed that position, cautioning that repeated violations put national security and the public interest at risk. Moreover, Prime Minister Mohammed Shia al-Sudani ordered an immediate investigation, directing the reinforcement of air defense and radar systems.
Despite mounting international and regional pressure, no official accusations have been issued. The Iraqi military dismissed claims involving the Popular Mobilization Forces (PMF), noting no irregular activity had been detected.
The PMF-aligned Coordination Framework also condemned the strikes as destabilizing acts carried out by rogue groups. 'None of the factions affiliated with us were involved in these operations,' affirmed senior Framework figure Amer al-Fayez in comments to Shafaq News, emphasizing the need to avoid further regional escalation.
Across the Kurdistan Region, unease is mounting among local communities and workers' unions. Growing concerns over oil-sector staff safety have prompted renewed calls for authorities to prioritize the protection of strategic energy facilities.
Pipeline on Pause
These attacks deepen an ongoing political stalemate over oil exports. The Iraq–Turkiye pipeline, capable of transporting 300,000 barrels per day, has remained idle since March 2023 following an arbitration ruling. Talks between Baghdad and Erbil continue to stall amid disagreements over pricing, operational control, and contract terms.
Tensions have been further strained by Baghdad's decision to cap recoverable production costs at $16 per barrel. International companies operating in the Kurdistan Region argue that actual expenses range between $24 and $26 per barrel, making a compromise essential for any restart in exports.
Dr. Sherwani warned that the drone campaign appears designed to disrupt any fragile momentum in Iraqi-Kurdish dialogue. 'These strikes don't just damage infrastructure—they complicate already difficult negotiations and weaken the prospect of reaching a unified oil policy.'
He also pointed out that continued production halts could prevent the Region from meeting its crude supply obligations to Iraq's Oil Ministry and SOMO, a failure that may deepen the rift with Baghdad.