Brent Prices Retreat below $70 as OPEC+ Mulls Another Output Hike

Brent Crude prices failed to hold onto the $70 per barrel handle for more than a day, dipping by 2% early on Monday as the market focused on imminent supply increases.

As of 7:28 a.m. EDT on Monday, Brent Crude prices were down by 1.74% at $68.87, after hitting $70 per barrel on Friday, the highest level in nearly two months.

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The U.S. benchmark, WTI Crude, slipped below $65 per barrel and traded down by 2.02% at $64.36.

More supply to the market, coming from Iraq’s semi-autonomous region of Kurdistan, and possibly more barrels from OPEC+, weighed on the price of oil early on Monday.

On Saturday, Iraq resumed crude oil exports from Kurdistan via a pipeline to the Turkish Mediterranean coast, after two and a half years of halted flows due to disputes over who should authorize the exports and how oil revenues would be distributed.

Now exports an estimated 230,000 barrels per day (bpd) are flowing again, following agreements reached between Iraq’s federal government, the Kurdistan Regional Government, and a group of international oil companies operating in Kurdistan.

Additional supply from Kurdistan is set to hit the oil market at a time when analysts, forecasters, and traders expect oversupply to start building with the end of the peak summer demand season.

The concerns of oversupply have added to reports that the OPEC+ group, which meets on October 5, will decide to continue raising its production.

The alliance will consider reversing in November another 137,000 bpd of the combined 1.65 million bpd cuts that it will begin unwinding in October with a first batch of 137,000 bpd, sources with knowledge of the group’s plans have told Bloomberg.

Despite the production hike from OPEC+, oil prices have not collapsed, with Brent prices trading closer to $70 than to $65 per barrel in recent weeks. Part of this could be due to estimates that the group is not hiking oil production as much as the headline figures in the agreement suggest, as some members are close to capacity while others are compensating for previous overproduction.

By Tsvetana Paraskova for Oilprice.com

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