The loss of Kirkuk’s oil revenues has plunged the KRG into chaos. Mortgaged to the hilt, it will struggle to repay billions of dollars owed to oil traders for prepayments alongside obligations to IOCs and its population.

The Kurdistan Regional Government (KRG) faces an existential crisis. Iraq’s swift reclamation of disputed territories in Kirkuk, Nineveh and Diyala provinces this week has seen the KRG lose nearly half of its oil production and revenues. Its leaders have lost...