Crude oil rises as Kurdish oil exports slow

Oil prices rose on Tuesday after a deal to resume exports from Iraqi Kurdistan stalled, allaying some investors' concerns that the restart would exacerbate concerns about a global supply glut.

Brent crude futures settled up $1.06, or 1.59%, at $67.63 a barrel, while U.S. West Texas Intermediate crude futures rose $1.13, or 1.81%, to settle at $63.41 a barrel.

Meanwhile, the Mexican export blend gained 94 cents, or 1.54%, to $62.01 a barrel.

Oil exports by pipeline from Iraq's Kurdistan region to Turkey had yet to resume Tuesday despite hopes for a deal to end the impasse, as two key producers sought debt repayment guarantees.

The agreement between Iraq's federal and Kurdish regional governments and oil companies aims to resume exports of around 230,000 barrels per day of oil from Kurdistan to the global market via Turkey, which have been suspended since March 2023.

Brent and WTI had fallen by around 3 percent over the previous four sessions.

"This was a perfect example of not counting barrels until they're pumped. The market collapsed on reports of a Kurdistan deal, and the lack of a deal has taken those barrels off the market," said Phil Flynn, senior analyst at Price Futures Group.

There will be greater supply

Overall, the global oil market is gearing up for higher supply and lower demand, hampered by the adoption of electric vehicles and economic pressures driven by U.S. tariffs.

In its latest monthly report, the International Energy Agency said global oil supply is expected to grow more rapidly this year, and the surplus could widen in 2026 as OPEC+ members increase output and supply from outside the group grows.

Still, risks loom over the market as traders monitor the European Union's consideration of stricter sanctions on Russian oil exports, as well as any escalation of geopolitical tensions in the Middle East.

"Low OECD oil inventories remain a supportive factor," said UBS analyst Giovanni Staunovo, referring to stockpiles in high-income economies around the world. "On the other hand, rising OPEC+ crude exports, as well as the absence of new sanctions against Russian oil exports, are a headwind for prices."

Crude oil stocks fell 3.82 million barrels in the week ending September 19, the sources said on condition of anonymity.