[HOUSTON] Oil prices settled up more than US$1 a barrel on Tuesday after a deal to resume exports from Iraq’s Kurdistan stalled, pacifying some investor concerns that the restart would exacerbate worries about global oversupply.
Brent crude futures settled up US$1.06, or 1.6 per cent, at US$67.63 a barrel, while US West Texas Intermediate crude rose US$1.13, or 1.8 per cent, to end at US$63.41 a barrel. Both benchmarks recouped modest earlier losses.
Pipeline oil exports from Iraq’s Kurdistan region to Turkey 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.
Brent and WTI had fallen for the previous four sessions, dropping around 3 per cent.
“This was a perfect example of do not count your barrels until they have been pumped. 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,” said Phil Flynn, a senior analyst at Price Futures Group.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
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 US tariffs.
In its latest monthly report, the International Energy Agency said world oil supply would rise more rapidly this year and a surplus could expand in 2026 as Opec+ members increase output and supply from outside the producer group grows.
Still, risks overhang the market as traders 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.
SEE ALSO
“Supportive elements are still low OECD oil inventories,” said UBS analyst Giovanni Staunovo, referring to stockpiles in higher-income economies around the world. “On the other hand, higher crude exports from Opec+ are a headwind for prices as well as the lack of new sanctions targeting Russian oil exports.”
US crude and petrol stocks fell, while distillate stocks rose last week, market sources said, citing American Petroleum Institute figures on Tuesday.
Crude stocks fell by 3.82 million barrels in the week ended September 19, the sources said on condition of anonymity.
Petrol inventories fell by 1.05 million barrels, while distillate inventories rose by 518,000 barrels from last week, the sources said.
“The market will be keeping a close eye on distillate inventories, the soft underbelly of the market,” said Price Futures Group’s Flynn.
A build in distillate stocks would help soften concerns surrounding Russian supplies amid attacks on the country’s oil infrastructure, Flynn added.
Ukraine’s military struck two Russian oil distribution facilities in the Bryansk and Samara regions overnight, Kyiv’s general staff said. REUTERS
