On Tuesday, March 17, the Iraqi authorities announced the resumption of crude oil exports to the Turkish Mediterranean port of Ceyhan through pipelines, offering a glimmer of hope for easing the disruption in oil supply from Gulf oil-producing countries. International oil prices fell in response on that day.
Due to the U.S. military actions against Iran, Iran has blocked the crucial passageway of the “Strait of Hormuz,” which accounts for about 20% of global oil transportation, leading to persistently high global oil prices. As a result, the benchmark Brent crude oil futures prices have remained above $100 per barrel in the past four trading days.
Sources from the North Oil Company in Iraq revealed that following an agreement reached between the Baghdad authorities and the Kurdistan Regional Government (KRG) on Tuesday, March 17, the pipeline exports have started to resume.
Two oil officials had stated last week that Iraq is aiming to transport at least 100,000 barrels of crude oil per day through that port. Additionally, due to the impact of military actions in the Middle East region, the production from Iraq’s key southern oil fields (the main region for oil production and exports in the country) has plummeted by 70%, down to just 1.3 million barrels per day.
Furthermore, on March 18, the National Oil Corporation (NOC) of Libya announced that following a fire at the Sharara oil field, crude oil is gradually being diverted for transportation through alternative pipelines.
Market sources also quoted data released by the American Petroleum Institute (API) on March 17, indicating a significant increase of 6.56 million barrels in U.S. crude oil inventories for the week ending March 13, well above Reuters’ estimate of 380,000 barrels.
On March 17, the U.S. military stated on the X platform that multiple 5000-pound bunker busters were dropped on Iran’s reinforced missile launch bases near the Strait of Hormuz, as Iran’s anti-ship missiles posed a threat to international shipping in the area. Iran confirmed that its top security official Ali Larijani was killed in the attack by Israel.
Soojin Kim, an analyst at Mitsubishi UFJ Financial Group (MUFG), told Reuters, “Despite this development, the extent of supply relief remains limited. Iraq’s current production is only about one-third of pre-crisis levels, and the transportation of oil tankers through the Strait of Hormuz continues to face significant constraints.”
In response to this, Mingyu Gao, the Chief Researcher on Energy and Chemicals at China Futures, believes that the death of Larijani and the U.S. strikes on Iranian coastal positions near the strait have given people a glimmer of hope for an early end to the conflict.
*(This article is based on information from Reuters)*