Dubai: Iraqi Prime Minister Haider Al Abadi said Turkey has agreed to deal only with Baghdad on oil exports from the self-ruled Kurdish region, which seeks secession from Iraq.

In a statement issued late on Wednesday following a phone call with his Turkish counterpart, Al Abadi said Binali Yildirim stressed his government’s support on all measures taken in response to the Kurdish independence referendum.

In defiance of Baghdad, the self-ruled Kurdish region has been unilaterally exporting crude oil produced in their region and contested areas through Turkey.

The statement adds that both countries will continue cooperating to help implement the measures.

The Kurds angered Baghdad and Iraq’s neighbours by holding an independence referendum this week. Though it’s non-binding, it has increased tensions between the Kurds and Baghdad as well as Turkey and Iran, both of which have a sizeable Kurdish population.

Oil prices steadied on Thursday, taking a breather after gains spurred by rising tension in northern Iraq following the semi-autonomous Kurdistan region’s vote for independence in a referendum.

“Profit taking and the fact that Kurdish oil exports seem unaffected by the referendum pushed crude lower,” said Tamas Varga, analyst at London brokerage PVM Oil Associates.

“But I think the market will strengthen again. Kurdistan and Northern Iraq now export 500,000-550,000 barrels per day (bpd).

That would be a big loss to the market,” Varga added.

Iraqi Kurdistan voted overwhelmingly on Monday in favour of independence, prompting Turkish President Tayyip Erdogan to say he could use military force to prevent the formation of an independent Kurdish state and might close the oil “tap”.

Turkey said on Thursday it would deal only with the Iraqi government on crude oil exports, “restricting oil export” operations to Baghdad.

US crude prices found some strength from a surprise fall in US stocks.

US crude inventories fell 1.8 million barrels last week, the US Energy Department said, versus forecasts for a 3.4 million-barrel build.

US refiners are still returning to full operations after Hurricane Harvey last month, but gasoline stocks surprisingly rose and stocks of distillates fell less than anticipated.

While this week’s US data gave a mixed picture, the outlook for global oil demand has strengthened, analysts say.

The International Energy Agency earlier this month raised its 2017 global oil demand growth estimate to 1.6 million barrels per day (bpd) from 1.5 million bpd, citing stronger-than-expected demand growth in the United States and Europe.

Still, US crude production rose to 9.55 million bpd last week, higher than before Harvey hit the Gulf Coast.

With Brent futures commanding their highest premium over US crude in more than two years, US crude has become increasingly competitive in foreign markets and exports hit a record 1.5 million bpd last week.

That complicates efforts by the Organisation of the Petroleum Exporting Countries and other major producers to push oil higher through output curbs, as every hike in price encourages more US production.