WASHINGTON (dpa-AFX) - Crude oil prices sank heavily on Monday in the wake of oversupply concerns due to Iraq's fresh oil exports from Kurdistan to Turkey as well as OPEC+ cartel's plans for increasing output.
WTI Crude Oil for November delivery was last seen trading down by $2.50 (or 3.80%) at $63.22 per barrel.
After nearly a two-and-a-half-year deadlock over technical as well as legal issues, Iraq has resumed crude oil exports from the semi-autonomous Kurdistan region to Turkey after a recent interim agreement. Eight oil companies that signed the deal and the Kurdish authorities are reportedly meeting in the next 30 days to arrive at a mechanism for clearing the outstanding $1 billion Kurdistan owes to some firms.
Iraq's oil minister stated that the agreement between Iraq's federal government, the Kurdistan Regional Government (KRG) and foreign oil producers operating in the region will allow 180,000 to 190,000 barrels per day of crude to flow to Turkey's Ceyhan port.
This restart, apparently pushed by the US, is expected to bring around 230,000 bpd of crude to international markets.
Meanwhile, the OPEC+ member nations are meeting on Sunday, when they are likely to approve another increase to their crude output. The alliance has been pumping almost 500,000 bpd less than its targets, somewhat diminishing the market concerns of a supply glut.
Last week, Ukraine conducted drone attacks targeting Russian energy infrastructures, triggering Russia to curb oil exports, which led to a sharp increase in crude prices.
On Sunday, Russia launched around 600 drones and nearly 50 missiles across Ukraine. Calling the strikes 'vile,' Ukraine's President Volodymyr Zelenskyy has asked the US to provide them with long-range missiles.
In the US, Trump is meeting top Democratic and Republican leaders today to discuss means for extending government funding. In the absence of an agreement, a partial shutdown would begin from October 1 in the US, crippling almost all major essential services to the citizens.
Economic uncertainty continues to prevail, with Trump last week adding another round of tariffs targeting pharmaceutical imports, furniture and trucks. These levies are set to take effect from Wednesday.
This comes in a scenario where the validity of 'reciprocal tariffs' is set to be decided by the US Supreme Court in the coming months.
While a smooth global trade scenario increases the demand for oil and energy and supports crude oil prices on the upside, lingering trade uncertainty flips the outcome to the opposite side.
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