Israel is importing over three-quarters of its oil from Iraqi Kurdistan, according to the Financial Times.
Between May and August 11, the newspaper reports, Israel imported 19 million barrels of Kurdish oil, equivalent to 77 percent of average demand in Israel, worth almost $1 billion.
This information came from shipping data, trading sources and satellite tanker tracking.
The Kurdistan Regional Government (KRG) did not admit selling oil to Israel.
However, a senior government adviser in Erbil said: "We do not care where the oil goes once we have delivered it to the traders... Our priority is getting the cash to fund our Peshmerga forces against Daesh [the Islamic State group] and to pay civil servant salaries."
Nineteen million barrels of oil would represent about one third of the KRG’s oil exports during this period, which go through the Turkish Mediterranean port of Ceyhan.
Other destinations for the KRG’s oil include Italy and Cyprus.
The KRG reached a budget deal with Baghdad last year under which the KRG would export 550.000 barrels of crude oil through official state channels in return for a 17 percent share of central government revenues. However the deal has effectively collapsed as falling oil revenues have meant Baghdad has only made limited payments to the KRG.
It has also said the KRG did not send it enough oil.
News of the KRG’s oil sales to Israel independent of central government supervision or control will confirm the conclusion of many political analysts that the ties between the central government and the KRG are weakening.
Some traders and industry analysts suggested Israel may be acquiring Kurdish oil at a discounted price, while others suggested it may be a way for Israel to funnel financial support to the Kurds, the Financial Times said.