Oil drops after Iraq, Kurdistan agree to resume exports

Oil drilling rigs

Oil prices fell today, March 18, after the Iraqi government and authorities in the Kurdistan region reached an agreement to resume oil exports through the Turkish port of Ceyhan, coinciding with the United States escalating its efforts to reopen the Strait of Hormuz.

Brent crude was trading down 2.25% at $101.09 a barrel, at 08:54 am Makkah time. West Texas Intermediate (WTI) fell 3.41% to $92.93 a barrel.

Diverting Iraqi oil through Turkey will only partially alleviate supply concerns, as Iraq's production – a member of OPEC – fell to about 1.4 million barrels per day, roughly a third of its levels before the closure of Hormuz.

Citigroup pointed out that oil markets will likely remain under pressure in the near term, CNBC reported.

In its baseline scenario, the bank expects that disruptions to flows through the Strait of Hormuz over the next four to six weeks will remove between 11 million and 16 million barrels per day from the market, pushing Brent crude to between $110 and $120 per barrel.