Oil dips after Iraq and Kurdistan agree to restart oil flow via Ceyhan pipeline

Brent crude's price has come under some downward pressure after the Iraqi government and the administration in semi-autonomous region of Kurdistan reached an agreement to restart oil flow via the Kirkuk-Ceyhan oil pipeline. 

IMAGE: Crude oil pipelines connected to an oil refinery. Getty Images

The decision comes as Iraqi oil exports from the country’s southern system via the Strait of Hormuz continues to be shut amid Iran’s ongoing conflict with the US and Israel, Iraq’s Ministry of Oil said in a statement.

Iraq was producing about 4.3 million b/d before the war broke out in the region, according to Iraq’s official news agency Iraqi News Agency (INA). Crude oil production has declined to about 1.2 million b/d since then.

Brent crude’s price felt some downward pressure after Iraq’s oil ministry said that the country has resumed oil exports of about 300,000 b/d via the pipeline to the Turkish port of Ceyhan.

“Crude oil pumping operations have resumed through the Turkish port of Ceyhan, after a period of suspension that posed a significant challenge to the oil sector,” INA reported citing Iraq’s oil ministry.

Brent crude slipped as "Iraq, Turkey agree to resume oil exports from Ceyhan," VANDA Insights' founder Vandana Hari said.

The Ceyhan pipeline has an export capacity of about 900,000 b/d. The decision to resume shipments comes despite ongoing disputes between Iraq’s federal government in Baghdad and the Kurdish regional authorities in Erbil over control of exports and revenue sharing.

Meanwhile, Iraq’s federal government is also negotiating with Tehran to allow some Iraqi oil tankers to access the Strait of Hormuz, INA reported.

By Aparupa Mazumder

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