By Omodele Adigun
Oil prices rose by more than $1 a barrel on Tuesday after a deal to resume exports from Iraq’s Kurdistan stalled, pacifying some investor concerns that the restart would add to global oversupply fears.
Brent crude futures were up $1.18, or 1.8%, to $67.75 a barrel by 10:38 a.m. EDT (1438 GMT), while U.S. West Texas Intermediate crude rose $1.27, or 2%, to $63.55 a barrel, both recouping modest earlier losses.
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%. Both benchmarks rose more than $1 a barrel during the session on Tuesday.
“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.
Overall, the global oil market is bracing for elevated supply and slowing demand, hampered by the take-up of electric vehicles and economic pressures fuelled by U.S. 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.
“Supportive elements are still low OECD oil inventories,” UBS analyst Giovanni Staunovo said. “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.”
U.S. crude oil stockpiles were expected to have risen last week, while gasoline and distillate inventories likely fell, a preliminary Reuters poll on Monday showed.
The market awaits weekly oil stock data from the American Petroleum Institute, later on Tuesday.
“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.
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