Iraq’s position on US oil sector investment has soured, with the country filing a lawsuit on May 26 that accused the US government of allowing companies under its control to agree to oil exploration and production deals directly with the Kurdistan Regional Government (KRG), according to a Reuters report.

The move followed a biting statement from the Iraqi Ministry of Oil that warned any foreign company against operating independently in Kurdistan without federal approval – as the decision to do so would go directly against Iraqi law. US companies have nonetheless taken advantage of attractive security arrangements, expedited approvals, and favourable contract terms that have been offered to them by the KRG – leading to the area becoming a favourite for investment. In contrast, Iraq’s central government remains highly bureaucratic and somewhat volatile, which continues to scare off any potential investors.

Following Iraq’s announcement, the US released a statement noting that it supported American energy companies’ contracts with the KRG – one of which included the signing of two deals worth tens of billions by regional prime minister Masrour Barzani during a meeting with US Secretary of State Marco Rubio in Washington.

In the meeting, Rubio proceeded to commend the deals with American companies, according to comments from State Department spokesperson Tammy Bruce.

“We encourage Baghdad and Arbil to work together to expand domestic gas production as soon as possible. These types of economic partnerships will benefit both the American and Iraqi peoples and help Iraq move toward energy independence,” she said, adding: “We also believe that US and Iraqi interests are best served by having a strong, resilient Iraqi Kurdistan region within a sovereign and prosperous federal Iraq”. Bruce continued to allude to the lawsuit, but did not directly address Iraqi concerns: “As far as the nature of the lawsuits, obviously we are looking forward to continuing these kinds of deals. We expect these kinds of deals to flourish and expect and would hope that they would be facilitated,” she remarked.

Despite increasing tension between both governments, oil flow from the country to the superpower continues unabated. Notably, the US Energy Information Administration (EIA) announced on June 2 that Iraq’s oil exports to the US had in fact risen in the past week, according to Shafaq News.

Weekly shipments of Iraqi oil increased to 235,000 barrels per day (bpd) last week in particular – a difference of 150,000 bpd when compared to the preceding week, when the country shipped 85,000 bpd to the US.

Along with Iraq, the US imported around 5.8mn bpd from ten other countries including Canada – accounting for 3.82mn bpd, Mexico – with 588,000 bpd – and Nigeria (464,000 bpd), according to the EIA.

This marks an increase of 661,000 bpd compared to the previous week, when US oil imports were at around 5.1mn barrels.

A significant amount barrels were also imported daily by the US from Libya (86,000 bpd), Saudi Arabia (372,000 bpd), Colombia (150,000 bpd), Venezuela (149,000 bpd), Brazil (51,000 bpd) and Ecuador (25,000 bpd).