By Robert Campbell NEW YORK, Aug 3 This week's thaw in the dispute between the Iraqi federal government and the Kurdistan region over oil export revenues will offer hard-pressed Mediterranean refiners less help than expected and underscores the wider impact of this issue. The semi-autonomous Kurdistan Regional Government (KRG) offered this week to partially resume exports of oil from the region for a month. Although the dispute has directly affected some 175,000 barrels per day of Iraq's Kirkuk blend exports, the shutdown has exacerbated the tight spot supply situation in the Mediterranean for sour crude oil, driving up the price of Russian crude throughout Europe. Baghdad and the KRG have been at loggerheads over the sharing of oil export revenues and regional control over the oil industry for some time. The KRG unilaterally halted oil exports in April to pressure the central government to turn over revenues it says is owed for the oil. Steps by the KRG to expand its oil exploration efforts with the help of international oil firms, and in defiance of Baghdad, have only further inflamed the issue. Led by ExxonMobil, international oil majors have risked Baghdad's wrath to sign exploration deals with the KRG this year even though Iraqi federal oil legislation remains unfinished. With Europe's ban on imports of Iranian crude oil coming into effect on July 1, the loss of some Kirkuk supplies has come at a particularly difficult time. Kirkuk is seen as a good substitute for Iranian crude, but the export disruption has made it difficult for Mediterranean refiners to substitute the Iraqi grade for Iranian oil. Crude oil traders say the dispute has contributed to lengthy delays in loading Kirkuk shipments for export as the loss of supplies from Kurdistan has exacerbated delays in fulfilling Kirkuk export programs. Tankers are forced to wait at least three weeks to load oil at Ceyhan, imposing significant costs on customers, traders say. There are few things oil refiners hate more than uncertainty over the delivered cost of crude oil, other than, perhaps, the risk that a cargo may not arrive in time to ensure continuous operations. OUTSIZED STRENGTH The uncertainty over shipping costs and the time it may take to receive oil has driven Mediterranean refiners to search for more reliable supplies. The result has been steady buying of Russian Urals crude oil, adding further upward pressure on the relative price of the main Russian export blend grade, which was already boosted by the ban on imports of Iranian oil. Strong prices for Urals in the Mediterranean have also supported the value of the grade in Northern Europe due to the active arbitrage trade between the Baltic and the Mediterranean. That in turn has lent some additional support for the prices of other short-haul Northern European crudes, including the four North Sea grades --Brent, Forties, Oseberg and Ekofisk-- that set the price of Brent. A key question for European oil traders is how long this dispute may go on. The KRG offered this week to partially resume shipments to the export terminal at the Turkish port of Ceyhan, but only until Aug 31, a move that will only somewhat alleviate the situation. Should the resumption of exports prove only temporary it will offer only a limited reprieve to Mediterranean crude buyers and will do little to alleviate concerns over the reliability of Kirkuk exports. A great deal of money may have to change hands just to ensure flows start to get steady. The KRG says it is owed hundreds of millions of dollars by Baghdad for oil exports. Foreign companies operating in the Kurdish region say they have not been paid for the majority of the oil they have exported since 2009. Yet up front cash is far from the only problem. The heart of the dispute is the Kurds' desire for greater autonomy from Baghdad and control over its own oil industry. The furious reaction of Iraqi federal officials to the exploration deals signed between the KRG and international oil majors suggests that an agreement over this issue remains distant. Iraqi politicians have been struggling since 2007 to pass federal oil legislation to replace the Saddam Hussein-era laws that still govern Iraq's oil sector. In the absence of progress on this crucial legislation further disputes between Baghdad and the KRG that affect oil exports remain likely.