Oil reserves hold importance not just in the realm of economic profit, but also wield significant influence in political matters throughout contemporary history (Yergin, 2011). There are numerous connections between domestic oil production and international policy actions (Ashford, 2022). In fragile states, entities resembling state organizations can participate in local oil extraction through the exercise of their territorial rights. Additionally, these structures can have an impact on political dynamics at both the regional and global levels. This article delves into the link between oil and the acknowledgment of statehood in Iraqi Kurdistan. It contends that the presence of oil has significantly contributed to the recognition of Kurdish statehood by providing a source of income and augmenting its economic and political prowess. The study analyzes the history of the oil industry in Iraqi Kurdistan and its impact on the region’s political and economic development. It also explores the political dynamics between Iraqi Kurdistan and the central government in Baghdad, along with the role of international actors in the recognition of Kurdish statehood. This paper concentrates on the positive outcomes of having rich natural resources and being recognized as a de facto state. Additionally, the article explains how Iraqi Kurdistan legitimizes its recognition as a de facto state by signing agreements with large oil companies since 2005 on its own territory. The study employs Caspersen’s “unrecognized state” definition and Krasner’s concept of sovereignty, along with Pegg’s definition of de facto states, to provide a comprehensive understanding of the Iraqi Kurdistan’s international position. For this study, it used the interviews that were conducted in 2017 in the Iraqi Kurdistan region.