Iraqi Kurdistan looked ready to unload the first shipment of crude oil from its new pipeline at an Israeli port.
After weeks of seeking a buyer for the disputed crude, over which Iraq's central government claims sole sales rights, a ship carrying the cargo was tracked to waters nearby Israel's Ashkelon port.
Reuters reported that the tanker is expected to dock early on Saturday, although it was not clear whether the oil on board the SCF Altai tanker had been sold to a local refiner or was going to be stored.
Facing legal threats from Baghdad, European governments have been wary of accepting the contentious cargo that left the Turkish port of Ceyhan in early June.
The crude was exported by the Kurdistan Regional Government (KRG) via a new pipeline from the autonomous region in Iraq to the Turkish port of Ceyhan. The pipeline's construction, designed to bypass the central government's own pipeline network, is at the centre of the ongoing row.
Baghdad and the KRG have been locked in a dispute over the right to sell oil produced in the autonomous region for months. Both parties insist that Iraq's constitution allows them to export the oil independently.
The KRG, which accuses Baghdad of withholding government funds it is owed, has long sought to increase its financial independence from the central government.
The SCF Altai tanker loaded the disputed crude from the United Emblem tanker during a ship-to-ship transfer near Malta, ship tracking data showed. The United Emblem was the second shipment of Kurdish crude to leave the port of Ceyhan. The first, United Leadership, remains at sea.
"We do not comment on the origin of crude oil being imported by the private refineries in Israel," an Israeli energy ministry spokeswoman was quoted as saying by Reuters.