Commodities giant Trafigura Group has ended its relationship with the government Kurdistanin northern Iraq, which is a new blow to the region’s ability to sell oil independently.
The separation comes after Trafigura failed to renegotiate the terms of the contract with the regional government, following the drop in Kurdish oil prices, according to a person familiar with the matter.
Trafigura pinned its hopes on negotiating with the Prime Minister, Masrour Barzani Davosafter the Kurdistan government refused to renegotiate, but the Kurdish leader canceled the agreed meeting at the last minute without justification, according to the person who asked not to be named because the matter is not public.
7 years ago, Trafigura joined the commodity trading companies that lent the Kurdistan government billions of dollars in exchange for future oil sales to help it finance its efforts for independence, in light of its financial crisis.
Oil is the lifeblood of Kurdistan’s economy, contributing more than half of government revenues, and oil exports through Turkey contribute to strengthening the region’s independence from Baghdad.
For commodity trading firms, deals with cash-strapped Kurdistan are a lucrative opportunity to secure renewed oil flows.
