By John Lee.
The Kurdistan Regional Government (KRG) has extended its deadline for the federal government to pay the money it says it is due in respect of oil exports to 15th September, after which time it will again halt exports of Kurdish crude.
Baghdad, on the other hand, has threatened to trim Erbil's budget by $3 billion as a result of the KRG's failure to ship the budgeted quantities of oil.
Meanwhile, the country rations food and continues to suffer from electricity shortages and run-down infrastructure.
Despite record oil exports, Iraq can ill afford to lose the revenues from 175,000 barrels of oil per day, totalling over £500 million per month, and both sides must find a way to resolve their differences before the deadline at the end of next week.