oil refinery
Flames emerge from a pipeline at Basra refinery in Basra province, IraqReuters

Turkey's Energy Minister Taner Yildiz has defended Ankara's decision to export Iraqi Kurdish oil after Baghdad accused its northern neighbour of being "greedy".

Yildiz described the relationship between Turkey and Iraq as fraternal. He insisted that the dispute between Iraq and the Kurdistan Regional Government (KRG) was a strictly Iraqi affair.

However, the timing of the move is anything but friendly and will widen the growing rift between the central government and the semi-autonomous body.

Baghdad and Arbil are embroiled in a long-running dispute over the right to export oil. Both parties say that the constitution allows them control over oil production, sales and general policy.

The pipeline linking the oil fields in the semi-autonomous region of Kurdistan and the Turkish port of Ceyhan was completed in 2013. Oil began flowing by December, although Ankara said it would wait until the KRG and Baghdad had reached an agreement before it began exporting the oil.

This left Baghdad with the upper hand in the dispute and the central government duly exerted pressure on the Kurds by withholding wages for KRG staff.

By going back on his earlier decision and approving the export of Kurdish oil on international markets, Turkey's Prime Minister Recep Tayyip Erdogan has relieved the pressure on the KRG and created an outlet for economic autonomy.

With an eye on August's presidential election, Erdogan may have seen an opportunity to boost the country's unstable economy and present himself as a friend of the Kurdish people. He is following through in his conciliatory approach to the Kurds within Turkey's borders, giving the Iraqi Kurds access to much-needed revenues. In return, Turkey gets cheap crude oil, which will buoy the country's coffers.

Yet, the move has infuriated Baghdad, who immediately filed international arbitration lawsuits at the International Chamber of Commerce (ICC) over the export.

Iraqi Prime Minister Nouri al-Maliki is facing a crippling terrorist insurgency across the country while also trying to form a new government – he won a plurality of seats in April's election but not enough for an outright majority. Maliki may also need the support of the Kurds to lead the country for a third term but he is negotiating from a position of relative weakness.

He is also under pressure from other oil-producing regions in the south of the country, who would seek the same rights as Kurdistan if it were allowed to keep the revenues from oil exports for its own government treasury.

In Iraq, power used to lie with Saddam Hussein and the vast state that he built up around himself. However, with the state dismantled by the Americans and the dictator long gone, power in the new Iraq resides with whoever controls the country's oil reserves.

While the KRG has made a breakthrough in its desire to wrest some power away from the central government, Baghdad will not relinquish its grip easily.