Oil prices plummeted on Tuesday (September 30th) ahead of an anticipated production increase by OPEC+ and as the resumption of oil exports from Iraq's Kurdistan Region via Turkey reinforced market expectations of a supply surplus.
Brent crude for November delivery, which expires on Tuesday, fell 84 cents, or 1.2%, to $67.13 a barrel at 08:09 GMT. U.S. West Texas Intermediate crude traded at $62.68 a barrel, down 77 cents, or 1.2%.
This decline extended Monday's decline, when Brent and WTI closed more than 3% lower after their sharpest daily declines since August 1st. Selling pressure intensified as OPEC+ sources hinted at another production increase, after prices fell following the resumption of crude exports from Iraq's Kurdistan Region via Turkey, said PVM analyst Tamas Varga.
At a meeting scheduled for Sunday, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, known as OPEC+, are likely to agree to increase oil production by at least 137,000 barrels per day, according to three sources familiar with the negotiations.
"Even though (OPEC+) is below its quota, the market still doesn't seem to like the fact that more oil is coming in," said Marex analyst Ed Meir. Meanwhile, crude oil flowed on Saturday through a pipeline from the semi-autonomous Kurdistan region of northern Iraq to Turkey for the first time in 2.5 years, after a temporary deal broke the deadlock, the Iraqi oil ministry said.
The market has remained cautious in recent weeks, balancing supply risks, particularly stemming from Ukrainian drone attacks on Russian refineries, with expectations of oversupply and weak demand. Elsewhere, US President Donald Trump won Israeli Prime Minister Netanyahu's support for a US-backed Gaza peace proposal, but Hamas's stance remains uncertain.
In an ideal scenario, shipping traffic through the Suez Canal would return to normal after the Gaza peace deal, which would eliminate most of the geopolitical risk premium, said PVM's Varga. Adding to the pessimistic sentiment, the potential risk of a US government shutdown has heightened demand concerns, ANZ analysts said in a note on Tuesday. (alg)
Source: Reuters
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