In a dramatic de-escalation of recent hostilities in Iraqi Kurdistan, where in a blitz campaign the Iraqi army was able to recapture Kirkuk , effectively regaining control of the oil-rich region, the Kurdish Peshmerga forces, i.e. the army of the autonomous region of Iraqi Kurdistan told Sky News Arabia that it has agreed to return to the 2003 Iraq border, which if confirmed would be a major concession to Iraq which has been pushing for just this conclusion for the past month.
The opportunistic Kurdistan Regional Government increased its territory by at least 40% during the war with Islamic State, bringing many of these disputed areas under its control after the Iraqi army withdrew in the face of advancing ISIS militants. However, as Iraqi forces and pro-govt militias have already regained control of many of these areas, including Kirkuk, over the past 48 hours, the Iraqi Kurdistan region had no other choice. According to the Kurdish news service Rudaw, the pre-2003 borders "exclude disputed areas such as Kirkuk, Khanaqin, Tuz Khurmatu, Makhmour, and Zumar from the Kurdistan Region."
Incidentally, at the start of September, Rudaw reported that Baghdad wants the Kurdistan Region to withdraw from disputed areas and return to pre-2003 borders between the autonomous region and Iraq, said Kurdistan President Masoud Barzani. At the time Barzani vowed that the Peshmerga will not retreat from any areas that were taken "with the blood of fallen soldiers." It took one month for him to change his tune.
Barzani said at the time that the planned independence referendum can work as a peaceful tool to settle outstanding issues between Erbil and Baghdad. In retrospect it turned out to be an epic disaster for the Kurdish autonomous region, which is about to lose a substantial portion of its territories.
Meanwhile, the Iraqi recalamation of Kirkuk appears to have gone without bloodshed, with US Coalition forces stating that aside from one incident of "miscommunication" no further reports of armed conflict between ISF-Kurdish Peshmerga.
If Sky News Arabia is confirmed, it would imply that a major geopolitical risk factor, and a potential upside catalyst for oil prices, has been eliminated. Tangentially, earlier today Goldman released a report called the "return of oil's geopolitical risks" in which it claimed that "Geopolitical risks to the oil market have continued to intensify, with Iraq’s military seizing oil fields formerly controlled by the Kurdistan Regional Government (KRG) yesterday, Monday, October 16 and President Trump decertifying the Iranian deal on Friday."
Well, at least half of these risks may now have been resolved, and if so expect the price of oil to react appropriately, which it is indeed doing...
Finally, Masoud Barzani, president of the autonomous Kurdish Iraqi region, issued the following statement on Tuesday:
Salahadin, Kurdistan Region of Iraq, (Krp.org)- President Masoud Barzani issued a statement today regarding the recent events in the Kurdistan Region which commenced with the attack on the city of Kirkuk in the hands of the Iraqi Popular Mobilization Forces.
The statement begins by referring to the fact that the people of Kurdistan have throughout history been oppressed and have lived with injustice. This injustice and this oppression have stemmed, the President says from the Kurds' defense of their identity. They have been, he adds, subjected to genocide and mass murder, the most recent of such atrocities was in the hands of the terrorists of the Islamic State. The statement reminds the people of Kurdistan, Iraq and the world that in spite of these atrocities, the people of Kurdistan have always been against waging wars and have worked in pursuit of peace.
In reference to the recent events in Kirkuk, the President states that some people from a certain political party had unilaterally paved the way for such attack whose result was the withdrawal of the Peshmerga forces from Kirkuk.
The statement reassures the people of Kurdistan that all of the resources of the Kurdistan Region will be allocated for the security and stability of the Kurdistan Region.
President Barzani calls upon the political entities of the Kurdistan Region to work towards unity. He also commends the endurance of the people of the Kurdistan Region. He also calls upon all of the media outlets of the Kurdistan Region to work responsibly during these arduous times facing the people of the Kurdistan Region.
The President concludes the statement by saying that those who paid the ultimate sacrifice for Kurdistan have not been lost in vain, and the same shall be true for those who voted for an independent Kurdistan.