Oil prices ease as Iraq resumes crude exports

(Sharecast News) - Oil prices softened on Wednesday on reports Iraq had resumed crude exports to Turkey's Ceyhan port, as the Middle East producer looks to bypass the stricken Strait of Hormuz. According to multiple reports, crude is now being transported from Iraq's Kirkuk oil fields to Ceyhan via pipeline after Baghdad, the Kurdistan Regional Government and Ankara struck deals to enable flows to restart.

That helped calm energy markets, although prices remain elevated. As at 0845 GMT, benchmark Brent crude was 1% lower at $102.42 a barrel while West Texas Intermediate was down 2% at $93.95.

However, Iraq's oil production still remains well below normal levels. Prior to the outbreak of war, Iraq was producing around 4.5m barrels of crude per day, but export issues forced it to curtail output.

According to Reuters, citing unnamed officials from the North Oil Company, Iraq is seeking to pump at least 100,000 barrels per day of crude through to Ceyhan, while the Iraqi state news agency has said pumping has resumed at a rate of 250,000 barrels.

Energy prices have soared since the US attacked Iran, as hostilities escalated across the region and the Strait of Hormuz, a vital shipping channel, became too dangerous to use. The majority of Iraq's oil is usually shipped through the waterway.

Brent was trading around $70 a barrel at the end of February.

Ipek Ozkardeskaya, senior analyst at Swissquote, said: "Oil is sharply down on news that Iraq signed a deal to resume oil exports via Turkey, bypassing the Strait of Hormuz, while Saudi Arabia is also rerouting exports towards the Red Sea. The region is reorganising, preparing for the possibility of a prolonged conflict.

"Restoring oil exports fully will take time, and we may soon see physical market shortages, likely keep oil prices under upward pressures.

"Yet, as flows adapt to alternative routes, the initial surge in oil prices seen at the start of the war could ease."