Background on Key Players and Context
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, play a crucial role in influencing global oil supply and prices. The group includes 13 members, such as Saudi Arabia, Russia, and others. Their decisions on production levels significantly impact the oil market.
Iraq’s Kurdistan region, located in northern Iraq, is a significant player in the oil market. After years of stagnation, an agreement between the Iraqi federal government, the Kurdistan regional government, and foreign oil companies has allowed crude oil to flow again through a pipeline from Kurdistan to Turkey. This development is expected to add around 230,000 barrels per day (bpd) back to international markets.
OPEC+ Production Increase Plans
On Sunday, OPEC+ is expected to approve another production increase for November. Market expectations are for an increase of at least 137,000 bpd due to the rising oil prices encouraging efforts to regain market share.
However, OPEC+ has been producing nearly 500,000 bpd below their targets, challenging market expectations of an oversupply.
Resumption of Iraqi Kurdistan Exports
The Iraqi Oil Ministry reported on Saturday that, for the first time in two and a half years, crude oil began flowing through a pipeline from the semi-autonomous Kurdistan region in northern Iraq to Turkey.
Following years of stalemate, a provisional agreement between the Iraqi federal government, the Kurdistan regional government, and foreign oil companies operating in the region will enable 180,000 to 190,000 bpd of crude oil to flow to the Turkish port of Ceyhan, as declared by the Iraqi Oil Minister to the Kurdish broadcaster Rudaw on Friday.
Impact on Oil Prices
As of 4:19 a.m. CDMX time, Brent futures fell by $1.01, or 1.4%, to $69.12 per barrel, after touching their highest level since July 31 on Friday. Meanwhile, West Texas Intermediate (WTI) in the United States dropped by $1.11, or 1.7%, to $64.61 per barrel.
The anticipated production increase from OPEC+ and the resumption of Iraqi Kurdistan exports have raised concerns about an oversupply in the global oil market, leading to the decline in oil prices.
Key Questions and Answers
- What is OPEC+ and why is it important? OPEC+ is a group of 13 oil-producing countries, including OPEC members and their allies like Russia. Their decisions on production levels significantly impact global oil supply and prices.
- Who are the key players in the Iraqi Kurdistan oil export resumption? The Iraqi federal government, the Kurdistan regional government, and foreign oil companies operating in the Kurdistan region are the key players involved in resuming crude oil exports.
- What is the expected impact on oil prices due to OPEC+ and Iraqi Kurdistan exports? The anticipated production increase from OPEC+ and the resumption of Iraqi Kurdistan exports have raised concerns about an oversupply in the global oil market, leading to a decline in oil prices.
