Iraqi oil production cuts could boost Brent prices

25 April 2023 200
Iraqi oil production cuts could boost Brent prices

News from the Middle East affects oil prices again.


According to Reuters, Iraq's northern oil exports won’t resume any time soon, even after a month of downtime. It happened because Baghdad and the Kurdistan government haven’t yet discussed all sides of the agreement necessary to resume exports. 


Turkey was forced to suspend Iraq's 450,000 bpd northern oil exports at the end of March. It was done following an arbitral decision of the International Chamber of Commerce under which Turkey is to pay Baghdad $1.5 billion as compensation for unauthorized exports of Kurdish oil between 2014 and 2018. About 75,000 barrels of federal oil were exported daily through the pipeline.


The Kurdistan region is struggling financially due to a lack of oil revenues, and the shutdown has worsened the situation. According to Reuters, Kurdistan's damage caused by the shutdown of the production amounted to 375,000 barrels per day and has been estimated to be nearly $850 million.


On April 4, authorities in Iraq and the Kurdish autonomous region tried to solve the problem of northern oil exports by signing a temporary agreement. Soon, it became clear that the agreement was inefficient. Discussions over contracts and mechanisms for settling debts related to the oil trade are still ongoing. 


Reuters states that Turkey is postponing negotiations on Middle Eastern oil exports due to the upcoming presidential elections set for May 14. The agency sees the possibility to restore oil exports in May, with Turkey being responsible for the delivery.


Northern Iraq's oil export problems and unresolved aspects of the agreement between Baghdad and the Kurdistan Region may push Brent prices up. Reduced production and export of oil led to a supply shortage in the market. Uncertainty in the oil market remains as the resumption of crude supplies isn’t defined.


The price went beyond the H1 timeframe downtrend.

Iraqi oil production cuts could boost Brent prices - Photo 1

Oil quotations form the third ascending wave on the M30 timeframe. Breaking through the top of the first wave at 82.80 will strengthen the growth signal.


Signal:

Long-term prospects for Brent oil are buying.

Target is at the level of 84.20.

Part of the profit should be fixed around the level of 83.15.

Stop-loss is around the level of 81.75.

The bearish trend is short-term, so choose a trading volume of no more than 2% of your balance. 

This content is for informational purposes only and is not intended to be investing advice.

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