Recently, U.S. Secretary of State Rubio and Iraqi Prime Minister Mohammed Shia' Sudani discussed the restoration of the oil pipeline between Iraq and Turkey. This pipeline, which was shut down in March 2023 due to regional disputes, is a crucial channel for Iraqi oil exports. Once reopened, it is expected to transport about 185,000 barrels of crude oil per day. Although this amount is relatively small, it could still impact international oil prices given the current tight supply and demand situation in the oil market.
The discussions coincided with U.S. President Trump's call to lower oil prices, as international oil prices hit their lowest level in 2023 on Tuesday. Analysts believe that the increased likelihood of the pipeline’s reopening has raised market concerns about oversupply, becoming one of the main factors driving recent declines in oil prices.
While the Iraqi government has stated that the resumption of pipeline exports will not exceed its OPEC+ quota, the market remains cautious about this statement. As the second-largest oil producer in OPEC, Iraq has a poor record of cutting production compliance, so there are still doubts about how it will balance the pipeline restart with adherence to production cut commitments.
Moreover, Iraqi Oil Minister Hayan Abdul Ghani mentioned that before resuming pipeline transportation, Iraq and Turkey are working to resolve related technical issues. Since the pipeline was shut down due to a payment dispute, officials have repeatedly announced its imminent reopening, yet it has never come to fruition.
