Oil prices experienced a slight decline on Tuesday as the global energy market eagerly anticipated news regarding the potential resumption of Iraqi oil exports, a re-entry that could ease supply restrictions caused by Saudi Arabia’s OPEC cut.
Brent crude slipped by 8 cents to reach $84.38 per barrel, while U.S. West Texas Intermediate crude saw a decrease of 7 cents, landing at $80.65 a barrel.
Analysts from ANZ Bank, Brian Martin, and Daniel Hynes, who spoke to Reuters, noted, “Crude oil struggled to keep its head above water on signs of supply tightness easing.”
In an exclusive by Reuters, Hayan Abdel-Ghani, Iraq’s Minister of Oil, had arrived in Ankara, the capital of Turkey, for discussions covering several issues, including the potential resumption of oil exports through the Ceyhan oil terminal.
It said that a source within the minister’s office relayed this information to them on Monday. It’s worth noting that Turkey put a halt to Iraq’s exports of 450,000 barrels per day (bpd) through the northern Iraq-Turkey pipeline on March 25 following an arbitration decision by the International Chamber of Commerce (ICC).
The reintroduction of more Iraqi crude oil into the market could play a crucial role in alleviating the supply constraints affecting sour crude, especially in light of the extended and intensified production cuts by the Organization of the Petroleum Exporting Countries and its allies (OPEC+).
Meanwhile, concerns persist about the weakening Chinese economy, the world’s second-largest oil consumer. The People’s Bank of China’s moderate one-year lending rate cut disappointed the market, leading to concerns about global fuel demand.
Reuters noted that J.P. Morgan analysts reported a slowdown in global demand growth for mobility fuels, with China’s base effect no longer factored in the numbers.
On the supply side, Iraq’s oil minister arrived in Ankara to discuss the potential resumption of oil exports through the Ceyhan oil terminal, a development that could alleviate supply constraints caused by OPEC+ production cuts.
Despite these factors, U.S. crude oil and gasoline inventories are expected to show declines, offering some support to oil prices.
The market is also closely monitoring U.S. economic data, the Federal Reserve’s annual economic symposium, and preliminary U.S. August PMI data for further insights into the oil market’s future dynamics.