Oil Adds $1 Per Barrel as Iraq Exports Deal Stall

By Adedapo Adesanya

Oil went up by more than $1 a barrel on Tuesday after a deal to resume exports from Iraq’s Kurdistan stalled, easing oversupply worries that had given investors some concerns.

Brent crude futures gained $1.06 or 1.6 per cent to trade at $67.63 a barrel and the US West Texas Intermediate crude futures rose by $1.13 or 1.8 per cent to end at $63.41 a barrel.

Pipeline oil exports from Iraq’s Kurdistan region to Turkiye had yet to restart on Tuesday despite hopes of a deal to end the deadlock, as two key producers asked for debt repayment guarantees.

The deal between Iraq’s federal and Kurdish regional governments and oil firms aims to resume exports of about 230,000 barrels per day of oil from Kurdistan to the global market via Turkey, halted since March 2023. The restart would exacerbate worries about global oversupply.

However, Turkiye, which holds the final decision, had not implement the move.

Turkiye shut the Iraq-Turkey pipeline after an international arbitration ruling ordered it to pay $1.5 billion to Baghdad for past unauthorized Kurdish shipments. The loss of export revenue has battered the KRG’s finances and complicated budget transfers from the federal government in Iraq.

Analysts noted that the market sold off on reports of a Kurdistan deal, and the lack of a deal has now taken those barrels out of the market.

Overall, the global oil market is bracing for elevated supply and slowing demand, hampered by the take-up of electric vehicles and economic pressures fueled by tariffs by the Donald Trump administration.

In its latest monthly report, the International Energy Agency (IEA) said world oil supply would rise more rapidly this year and a surplus could expand in 2026 as the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) members increase output and supply from outside the producer group grows.

Traders continue to monitor the European Union’s consideration of stricter sanctions on Russian oil exports, as well as any escalation of geopolitical tensions in the Middle East.

The American Petroleum Institute (API) estimated that crude oil inventories in the United States fell by 3.821 million barrels in the week ending September 19. So far this year, crude oil inventories are up just 1.5 million barrels.

Petroleum (gasoline) inventories fell by 1.05 million barrels, while distillate inventories rose by 518,000 barrels from last week.

Official data from the US Energy Information Administration (EIA) will be released later on Wednesday.