Countdown to the restart of Iraq oil pipeline, oil price decline stuck in "supply surplus" situation.

The Iraqi oil minister stated that after being interrupted for nearly two years due to payment disputes, the oil exports from the Kurdish region in northern Iraq are expected to rapidly restart within the next two days. As the second-largest oil producing country in the Organization of the Petroleum Exporting Countries (OPEC), Iraqi Oil Minister Hayan Abdul Ghani said during a meeting in Baghdad on Monday that they are in discussions with Turkey on technical issues in preparation for the resumption of oil transportation through the pipeline to the Turkish port of Ceyhan on the Mediterranean Sea. Since 2025, regardless of the policies that former President Trump may introduce that could potentially affect the supply and demand outlook of the oil market, as well as the dynamics between Russia and Ukraine, traders are still insisting on pricing "oversupply," and if Iraq's increase in oil production floods the oil market, international oil prices may enter a new downward trend. Hayan Abdul Ghani stated on Monday, "Once we obtain approval from Turkey, exports will resume immediately. We hope to achieve this rapidly within two days." Since the Iraqi parliament approved the increase in payment standards for the operating companies in the Kurdish region, the restart of Iraqi oil exports in the past month has garnered attention from commodity traders. Iraqi Deputy Oil Minister Bassim Mohammed Kujael stated over the weekend that the initial transport volume of crude oil through the pipeline is approximately 185,000 barrels per day. Although this transport volume is even less than half of the level before it was shut down in March 2023, it may still exacerbate the concerns of global commodity traders about oversupply of oil. President Trump had previously called for the oil-producing alliance led by Russia and Saudi Arabia, known as "OPEC+," to lower oil prices in January, which has increased attention on the actions of this organization as well as the two major Middle Eastern oil-producing countries, Iran and Iraq. The latest statement from the Iraqi oil ministry shows that in a joint conference call with the highest-level energy ministers of Saudi Arabia and Russia, as well as the OPEC Secretary-General Mohammad Barkindo, Iraq reiterated that restarting the oil pipeline would not affect its commitment to production quotas with OPEC+. The statement noted that Iraq will "continue efforts to compensate for the accumulated excess production, while considering the new developments of the federal government receiving oil production from the Kurdish region and restoring the Iraqi-Turkish oil pipeline exports, all while adhering to the share and overall excess compensation requirements of the OPEC voluntary production cut agreement." Traders focusing on the oil market seem increasingly numb to the series of policy changes that may be implemented by President Trump after reassuming office, and regardless of the policies that may affect the supply and demand outlook of the oil market, as well as the dynamics between Russia and Ukraine, traders are still insisting on pricing "oversupply." Both WTI and Brent crude oil prices are trending downward due to expectations of oversupply. The implied volatility of Brent crude oil futures, which is an indicator of the expected volatility of oil prices by traders, unexpectedly fell to the lowest level since July of last year earlier this week. With the low volatility index and the continued oversupply sweeping through the trading market, if the additional 185,000 barrels of crude oil from Iraq are reintroduced to the market daily, the trend of oil trading prices remains pessimistic. The "OPEC+" oil-producing alliance, including Russia, is still reducing the supply of oil in the market, which helps to some extent in maintaining the floor price of oil trading, while also indicating that there is enough surplus production capacity in the market to temporarily deal with sudden global supply interruptions. According to commodity teams at Wall Street giants like Goldman Sachs, Bank of America, and Citigroup, the overall oil market including crude oil and refined products like diesel will inevitably move towards "oversupply" by 2025, leading to a prolonged period of low oil trading prices. In the latest trends in global oil prices, on Monday, the international crude oil benchmark Brent crude oil futures fell to around $74.2 per barrel, nearing a two-month low and maintaining a downward trajectory mainly due to market expectations of the resumption of oil exports through the pipelines in Kurdistan. The Iraqi oil ministry announced that all necessary procedures have been completed to resume oil exports through the Iraq-Turkey pipeline, indicating that the disputes that have disrupted oil circulation in the region for the past two years may be resolved. Commodity traders are also continuing to monitor the progress of negotiations to end the Russia-Ukraine war, as a peace agreement could lead to significant relaxation of US sanctions on Russian oil, potentially increasing global supply.