Oil prices fall as markets look up Iraq for supply boost
Agency Report
Oil prices declined yesterday as markets anticipate supply boost from Iraq export coming into the global commodity market.
Concerns about supply driven by geopolitical tensions eased, supported by prospects of crude export resumption from Iraq’s Kurdish Regional Government (KRG), while a surprise draw in US inventories curbed deeper losses.
Brent crude was trading at $68.26 per barrel, down 0.13% from the previous close of $68.35. US benchmark West Texas Intermediate (WTI) decreased by 0.12 per cent to $64.58 from $64.66 in the prior session.
The KRG’s Ministry of Natural Resources said it had met all requirements to restart flows and reached agreements with domestic and foreign firms except one, stressing the refusal of a single company would not block exports. The ministry added it is awaiting Baghdad’s approval to resume shipments.
On March 25, 2023, a Paris-based international arbitration court ordered the suspension of crude exports from the KRG and Kirkuk via Türkiye’s Ceyhan port after a lawsuit filed by Iraq’s federal government.
KRG Prime Minister Masrour Barzani had criticized the suspension of exports through Ceyhan in a June 25 statement, saying the halt was due to Baghdad’s legal action.
Analysts said ongoing concerns over supply glut and demand uncertainty continue to weigh on markets, while the potential restart of the KRG pipeline adds downward pressure on prices.
Meanwhile, data showing a surprise decline in US crude stocks signaled rising demand in the world’s largest oil consumer, providing support for prices.
US commercial crude oil inventories fell by about 600,000 barrels to 414.8 million barrels last week, according to data from the Energy Information Administration (EIA). Markets had expected an increase of around 800,000 barrels.
During the same period, US gasoline inventories dropped by around 1.1 million barrels to 216.6 million barrels. Daniel Hynes, senior commodity strategist at Australia and New Zealand Banking Group, noted that with a second consecutive weekly decline, US inventories had fallen to their lowest level since January, also highlighting the drawdown in gasoline and refined products.
Iran said Wednesday that its oil sales will not be restricted if UN sanctions are reinstated under the so-called snapback mechanism.
Petroleum Minister Mohsen Paknejad said the snapback mechanism “doesn’t directly discuss oil sales, but rather issues in other areas such as commercial, financial, sales, and sea transportation.”
“Oil sales continue, and we have no problem,” the state news agency IRNA quoted him as saying on the sidelines of the UN General Assembly in New York.
“It is natural that if we encounter a situation that requires taking measures, the necessary planning will be made,” the minister said.
European signatories of the 2015 nuclear agreement – the UK, France, and Germany – triggered the snapback mechanism under UN Security Council Resolution 2231 on Aug. 28, after Iran halted cooperation with the UN nuclear watchdog, claiming a biased stance of the International Atomic Energy Agency (IAEA) against it.
Iran denounced the European move as legally baseless and politically motivated. Tension escalated regarding Iran’s nuclear program after Israel launched a surprise attack on Tehran on June 13, targeting military, nuclear, and civilian sites as well as senior military commanders and nuclear scientists.
Tehran launched retaliatory missile and drone strikes, while the US bombed three Iranian nuclear sites. The 12-day conflict came to a halt under a US-sponsored ceasefire that took effect on June 24.
