Oil prices continue to fall due to an agreement between the governments of Iraq and Kurdistan to resume operations of a key oil pipeline. Investors are concerned about a possible oversupply in the global market. This was reported by Reuters, writes UNN.
Details
On Tuesday, September 23, oil prices began to decline, despite the fact that yesterday the price of "black gold" increased amid rumors of new sanctions against Russia.
Brent crude futures fell by 0.63% to $66.15 per barrel, while American WTI lost 0.58% and traded at $61.92. Thus, over the past week, both brands have lost about 4%.
Pressure on the market intensified after Baghdad and the Kurdish administration reached a preliminary agreement on resuming operation of the oil pipeline. This fueled expectations of increased exports from the region and the risk of oversupply.
The prevailing theme remains concerns about oversupply, while demand prospects are still uncertain as we approach the end of the year. The restart of the KRG pipeline is also putting pressure on prices.
Global supplies are projected to grow significantly faster this year than previously forecast. This conclusion was reached by the International Energy Agency in its latest report. In the long term, by 2026, the oil surplus may become even more noticeable, as OPEC+ increases production, and countries outside the cartel also increase production.
At the same time, the market situation remains unstable. Investors are closely monitoring discussions in the European Union regarding possible tightening of sanctions against Russian oil exports and developments in the Middle East, where geopolitical risks can quickly affect price dynamics.
Additional uncertainty is created by data from the US: crude oil inventories are expected to have increased last week, while gasoline and distillate volumes decreased.
According to the Joint Organizations Data Initiative (JODI), Saudi Arabia cut oil exports to their lowest level in four months in July. In contrast, Iraq, the second largest producer within OPEC+, increased supplies, fulfilling the cartel's agreements.
Recall
It was reported earlier that after a three-week decline, oil prices began to rise as the market reacted to possible new European Union sanctions aimed at reducing Russia's energy revenues.
On September 19, oil prices fell, as fears about fuel demand in the US outweighed expectations that the first interest rate cut by the US Federal Reserve this year would lead to increased consumption.