Oil prices retreated in early Asian trade on Monday, edging lower after the resumption of crude exports from Iraq’s Kurdistan region and growing expectations that OPEC+ will approve another production increase in November. The developments added to concerns of rising supply in an already delicate market.
At the time of writing, WTI crude was trading at $65.16 per barrel, down 0.85%, while Brent crude was priced at $69.61 per barrel, a decline of 0.74%. Both benchmarks gave back ground after strong gains last week, when escalating geopolitical risks briefly lifted sentiment.
For the first time in more than two years, oil began flowing again through the pipeline connecting northern Iraq’s Kurdistan region to Turkey’s Ceyhan port. The restart follows an interim deal between Iraq’s federal government, the Kurdistan Regional Government (KRG), and international oil producers operating in the region.
According to Iraq’s oil ministry, the agreement initially allows 180,000–190,000 barrels per day (bpd) to reach international markets, with volumes potentially climbing to 230,000 bpd in the coming months. The United States had pressed for a resolution to the long-running dispute, viewing Kurdish exports as a stabilizing factor in global oil supply chains.
The restart is particularly significant given its timing, with OPEC+ members already weighing additional output increases.
OPEC+ is expected to move ahead with another modest supply hike when it convenes on Sunday. Sources close to the talks suggest the group could approve at least 137,000 bpd of additional production.
The recent oil price rally has only strengthened OPEC+’s incentive to restore more volumes, with the coalition eager to secure market share while avoiding accusations of artificially constraining supply. Still, despite planned hikes, the group has consistently produced nearly 500,000 bpd below its collective target, underscoring structural challenges that limit its capacity to quickly add barrels.
While supply concerns are dominating oil markets at the start of the week, geopolitical risk has been pushing oil prices higher. Last week, crude prices recorded their strongest weekly gains since June, with Brent and WTI rising more than 4%. That rally was largely driven by reports of Ukrainian drone strikes on Russian energy infrastructure, which temporarily curtailed Moscow’s fuel exports.
The weekend brought renewed conflict as Russia launched heavy bombardments on Kyiv and other Ukrainian cities. Though the attacks have yet to materially disrupt energy flows, traders remain alert to the possibility of further escalation.
By Charles Kennedy for Oilprice.com
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