A Feb. 15 ruling by Iraq’s Federal Supreme Court that deemed the 2007 oil and gas law governing the country’s Kurdistan region to be unconstitutional is a huge blow to the Kurdistan Regional Government, with direct ramifications for its critical energy deals with Turkey, sources say.

The KRG used the law to develop its own oil and gas sector independently of Baghdad, part of a concerted effort to wean itself off the central government as it pursued outright independence, signing multi-billion-dollar deals with international oil companies. The KRG’s official justification is that Baghdad has and continues to fail to give the Kurdistan Region its fair share of the national budget and oil revenues.

The ruling comes amid continued political infighting between a plethora of Shiite and Sunni factions that has prevented the formation of a national government since elections were held in October 2021. The two leading Iraqi Kurdish groups, the more powerful Kurdistan Democratic Party and the Patriotic Union of Kurdistan, are also bogged down in squabbles over which of their respective nominees should be Iraq’s next president.

The court’s decision is seen as linked to the intrigues swirling in Baghdad, and according to well-informed sources, caught Iraq’s Prime Minister Mustafa al-Khadimi, who has very good relations with the Iraqi Kurds, off guard.