Oil prices faces further oversupply jitters as Kurdistan oil exports may resume

June 14, 2024 07:22 AM AEST | By Investing

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Oil prices faces further oversupply jitters as Kurdistan oil exports may resume

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Investing.com -- Worries about a looming crude supply surplus reining in oil prices have been lingering for months, and now could be set to intensify as Iraq and Kurdistan appear to be closing in on a deal that could trigger a fresh wave of supply.

Iraq's Oil Minister Hayan Abdel-Ghani has touted progress recently on talks with Kurdistan region officials on a deal for Kurdistan to resume oil exports.

But while the new export deal, estimated to add around 300,000 of barrels of oil per day to global supplies, isn't expected to materially alter oil prices, Roth MKM says, "it will have some modest downward impact over time."

The potential of more barrels coming online would likely keep global oil prices a "bit more in check this summer," Roth adds, while offsetting some of the OPEC+ fueled undersupply situation, expectted between now and September due "to the typical seasonal demand strength that the market sees in the third quarter."

Talks of a deal in the making come in the wake of Iraq's recent repairs to the Kirkuk-Ceyhan oil pipeline -- shut in 2014 after sustaining damage from repeated attacks by Islamic State militants -- paving the way for capacity to transit 350,000 barrels of oil per day from Kurdistan to Turkey.

While certainty over a deal isn't guarantee, the necessary political to finally broker a revenue sharing deal for Kurdish oil between Iraq and Kurdistan is seemingly in the offing, Roth added.

This article first appeared in Investing.com

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