Since the flow of crude oil from Iraq’s northern border was temporarily suspended on Mar. 25, the focus of mainstream media has been on the clash between Baghdad and Erbil over managing oil production and exports. The two sides have for years been locked in a contest over the issue. The broader impact of the halt to the Kurdistan Regional Government’s (KRG) crude exports of approximately 400,000 barrels per day (bpd) has also gotten attention—even though it has remained limited as it represents only 0.5% of global oil supply, and 1% of seaborne exports.

The Iraqi federal government and the semi-autonomous KRG have now reportedly reached an “initial agreement” to resume exports through the northern route. But while the world has been focused on developments inside Iraq, there is another important layer to the story which has been largely overlooked: the impact on Israel, a key...