Oil prices climbed over $1 per barrel on Tuesday following a delay in resuming exports from Iraq’s Kurdistan, easing some investor fears about global oversupply. By 12:46 p.m. EDT (1646 GMT), Brent crude futures increased by $1.06, or 1.59%, reaching $67.63 per barrel, while U.S. West Texas Intermediate crude rose by $1.15, or 1.85%, to $63.43 per barrel. Both benchmarks recovered from earlier minor losses.
Despite expectations for a resolution, oil exports via pipeline from Iraq’s Kurdistan region to Turkey had not resumed as of Tuesday, due to key producers demanding debt repayment assurances. The agreement between Iraq’s federal and Kurdish governments and oil firms is intended to restart the export of approximately 230,000 barrels per day from Kurdistan to the global market via Turkey, a halt in place since March 2023.
Brent and WTI had declined over the previous four sessions, losing about 3%.
“This situation is a classic reminder not to count your barrels before they are pumped. The market reacted to reports of a Kurdistan deal, but the absence of a finalized deal has removed those barrels from the market,” said Phil Flynn, senior analyst at Price Futures Group. The global oil market is preparing for increased supply and reduced demand, impacted by the rise of electric vehicles and economic challenges from U.S. tariffs. According to the latest monthly report by the International Energy Agency, global oil supply is expected to rise swiftly this year, potentially leading to a larger surplus by 2026 as OPEC+ boosts output and non-member supply grows. Nevertheless, the market faces risks as traders watch the EU’s potential stricter sanctions on Russian oil exports and any rise in geopolitical tensions in the Middle East. “Low OECD oil inventories remain a supportive factor,” stated UBS analyst Giovanni Staunovo, referring to reserves in wealthier economies. “Conversely, higher crude exports from OPEC+ and no new sanctions on Russian oil exports are challenging for prices.” U.S. crude oil stockpiles were anticipated to have increased last week, while gasoline and distillate inventories likely decreased, according to a preliminary Reuters poll on Monday.
The market is awaiting weekly oil stock data from the American Petroleum Institute, expected later on Tuesday.
“The market will closely monitor distillate inventories, the market’s vulnerable point,” said Flynn from Price Futures Group.
An increase in distillate stocks could alleviate concerns about Russian supplies amid attacks on its oil infrastructure, Flynn added. Ukraine’s military targeted two Russian oil facilities in the Bryansk and Samara regions overnight, reported Kyiv’s general staff. Ukrainian President Volodymyr Zelenskiy planned to meet U.S. President Donald Trump at the U.N. on Tuesday, pushing for new sanctions on Russia in hopes of gaining stronger U.S. support for Kyiv’s war efforts.
