A U.S. judge has said she lacked jurisdiction to order the seizure of a tanker carrying some 1 million barrels of Kurdish crude oil about 100 kilometers off the Texas shore.
The judge said on July 29 her earlier order for U.S. Marshals to seize the cargo could not be enforced.
It follows a complaint filed by the Iraqi government, which claims the oil was smuggled out of Kurdistan without Baghdad's permission.
The judge said the case should be settled in Iraq. The judge said she lacked jurisdiction because the vessel was outside U.S. territorial waters.
The government in Baghdad and the autonomous Kurdish Regional Government have long-standing disagreements over oil rights.
Washington has discouraged companies from purchasing oil directly from the Kurds in an effort to support Iraq's fragile central government.