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Winston Churchill understood the significance of the black stuff seeping to the surface in the Kurdish plains of Mesopotamia when he included the region within Iraq as the British forged the nation in the 1920s.

In doing so, Churchill, the colonial secretary at the time, set in train almost a century of bickering between the Iraqi government and its Kurdish enclave over the areas estimated 45 billion barrels of crude.

While their latest dispute was temporarily resolved last month to help finance the struggle against Islamic State, the accord has not addressed differences between administrations in Baghdad and Erbil that include the future of Kirkuk, northern Iraqs main oil hub. The Iraqi government started pumping crude from Kirkuk via Kurdish pipes that bypass militant-held territory to Turkey, Al-Mada Press reported Jan. 1.

The need to finance military operations has brought together the Iraqi government and the Kurds, said Hussein Allawi, a Baghdad-based oil analyst. But this is a temporary agreement that does not resolve fundamental differences.

Under the deal, the Kurdistan Regional Government will share revenue from the 250,000 barrels a day that it had been unilaterally shipping from its territory to the Turkish port of Ceyhan. Iraq says it intends to increase exports from Kirkuk, which Kurdish Peshmerga forces are defending from Islamic State attack, by 300,000 barrels a day during 2015. The central government in Baghdad has also resumed budget payments to Kurdish authorities, including a one-time payment of $1 billion to cover expenses of the Peshmerga.

While the Iraqi central government is set to bank increased revenue, its oil exports to Turkey now depend on pipelines traversing the Kurdish region.

Should Baghdad try to withhold budget cash again we hold a key to their oil exports, Nechirvan Barzani, the prime minister of the KRG, said Dec. 3, according to his governments website. The agreement also gives the KRGs oil sales through its pipelines tacit approval by Baghdad.

The shift in the balance of power explains why the pact may not last long.

Independent oil sales from the KRG are not going to be tolerated by Baghdad in the long term and eventually this deal will collapse, said Christian Sinclair, assistant director of Center for Middle Eastern Studies at the University of Arizona.

The accord does not resolve long-standing points of friction between Baghdad and Erbil, that also include the KRGs ambitions for independence, Sinclair said.

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Iraq Oil Deal Evokes Churchill in Islamic State Battle