Background on Key Figures and Context
The Kurdish region in Iraq has been a significant player in the global oil market, exporting around 230,000 barrels per day through Turkey. However, since March 2023, these exports have been suspended due to disputes between the federal and regional Kurdish governments, as well as oil companies. The stalled exports have had an impact on global oil prices.
Oil Prices Increase Following Export Stalemate
On Tuesday, oil prices rose after an agreement to resume Kurdish oil exports failed to materialize. This development eased concerns among some investors that the resumption would exacerbate global oversupply worries.
- Brent crude futures closed up by $1.06, or 1.59%, at $67.63 per barrel.
- West Texas Intermediate (WTI) crude in the United States increased by $1.13, or 1.81%, to close at $63.41 per barrel.
- Mexico’s export blend gained 94 cents, or 1.54%, to $62.01 per barrel.
As of Tuesday, the oil exports via pipeline from the Kurdish region in Iraq to Turkey had not yet resumed, despite hopes for an agreement to end the standstill. Two key producers demanded payment guarantees for outstanding debts.
Market Factors Affecting Oil Prices
The global oil market is preparing for increased supply and decreased demand, hampered by the adoption of electric vehicles and economic pressures stemming from U.S. tariffs.
According to the International Energy Agency’s latest monthly report, global oil supply is expected to rise more rapidly this year, and the surplus could expand in 2026 as OPEC+ members boost production and non-OPEC+ supply grows.
However, risks loom over the market as operators monitor the European Union’s potential for stricter sanctions on Russian oil exports, along with any escalation of geopolitical tensions in the Middle East.
Supportive Factors
“Low OECD oil inventories continue to provide market support,” stated UBS analyst Giovanni Staunovo, referring to reserves in high-income economies worldwide. “On the other hand, increased OPEC+ crude exports and the absence of new sanctions on Russian oil exports pose a headwind for prices.”
OECD crude stocks fell by 3.82 million barrels in the week ending September 19, according to sources who spoke on condition of anonymity.
Key Questions and Answers
- What is the current situation with Kurdish oil exports? As of now, Kurdish oil exports remain stalled due to disagreements between the federal and regional Kurdish governments, as well as oil companies. An agreement to resume these exports has not been reached.
- How did oil prices react to this news? Oil prices increased on Tuesday following the failed agreement, as investors’ concerns about exacerbating global oversupply worries eased.
- What factors are influencing the global oil market? The market is facing increased supply and decreased demand due to factors like the adoption of electric vehicles and economic pressures from U.S. tariffs.
- What are the risks to the oil market? Operators are monitoring potential stricter EU sanctions on Russian oil exports and any escalation of geopolitical tensions in the Middle East.
