Oil Falls, Iraq-Kurdistan Pipeline Deal Alleviates Some Supply Risks
Oil prices weakened on Wednesday after Iraq signed an agreement with Kurdistan to resume exports via a pipeline to the Turkish port of Ceyhan, bypassing the Strait of Hormuz. This development signals additional supply amid shipping disruptions caused by the conflict, although the market believes the impact has not resolved the underlying issue.
Brent fell below US$101 per barrel after surging more than 3% on Tuesday, while WTI hovered around US$93. In midday trading in Singapore, the Brent May contract fell 2.4% to US$100.93 per barrel, while the WTI April contract fell 3.4% to US$92.97; the more active May contract fell 3.4% to US$92.31.
Geopolitically, the United States announced it used penetrating munitions to hit Iranian anti-ship cruise missile sites near the Strait of Hormuz, a vital waterway that President Donald Trump is seeking to reopen. The conflict also escalated after Iran confirmed the death of Ali Larijani, Secretary of the Supreme National Security Council, seen as a key figure in the wartime leadership.
Some analysts believe Larijani's death could increase the risk of Iran taking more aggressive action against oil flows. Aaron Stein of the Foreign Policy Research Institute said the situation could potentially trigger more intense US operations, including possible tanker escorts, which could further disrupt shipping lanes.
Although Iraqi exports are being diverted through Turkey, the market views the supply improvement as only partial, as Iraqi production has reportedly fallen to around 1.4 million barrels per day, roughly a fraction of the level before the effective closure of Hormuz. Meanwhile, market focus remains on the Hormuz chokepoint, which is said to remain "effectively closed," with shipping traffic influenced by political calculations and access issues.
Brent has risen nearly 70% this year, particularly after the initial US and Israeli attacks on Iran late last month, which followed disruptions to energy assets and tanker traffic. The surge in energy prices has also raised concerns among central banks, with US diesel prices reportedly hitting US$5 per gallon this week, while markets await the Fed's interest rate decision, which is expected to remain unchanged. (asd)
Source: Newsmaker.id
