Oil prices edged lower this morning after Iraq reached an agreement with Turkey that helped calm fears about crude supply disruptions caused by the blockade of the Strait of Hormuz.
Brent crude was trading near $102 per barrel, down roughly 1%, after briefly slipping below the $100 threshold earlier in the session, while U.S. West Texas Intermediate (WTI) crude dropped to about $93.40 per barrel.
The retreat in prices followed Iraq’s announcement that some of its oil exports would resume through a pipeline route to a Turkish port. The arrangement, reached with the authorities of Iraqi Kurdistan, allows shipments to bypass the Strait of Hormuz.
In a statement, the state-owned company responsible for oil fields in northern Iraq confirmed “the start of operations at the Sarlo pumping station, with the resumption of pumping and export of oil from Kirkuk to the Turkish port of Ceyhan, with an initial export capacity of 250,000 barrels per day.”
The Kurdistan Region’s Ministry of Natural Resources also said that pumping operations began at 6:30 a.m. local time (4:30 a.m. GMT) to export oil “through the Kurdistan pipeline to the Turkish port of Ceyhan.”
After the war in the Middle East erupted on February 28 — following the joint Israeli-U.S. offensive against Iran — Iraq, a founding member of OPEC, halted all oil exports. The country typically ships around 3.5 million barrels per day, and authorities had been searching for alternative routes after Iran effectively rendered the Strait of Hormuz impassable.
According to estimates cited by Bloomberg, however, the reopening of the pipeline will only partially restore export volumes to levels seen before the conflict.
Meanwhile, reports suggest the United Arab Emirates may assist the United States with maritime transport operations in the Strait of Hormuz, potentially becoming the first country to respond positively to Donald Trump’s call for international support to secure the strategic shipping lane.
Oil markets also reacted to fresh data on U.S. inventories released overnight, which showed a larger-than-expected increase in crude stockpiles.
Figures from the American Petroleum Institute (API) revealed that inventories rose by 6.60 million barrels last week, compared with expectations for a decline of about 0.6 million barrels.
The API report often signals a similar outcome in the official U.S. inventory figures published by the Energy Information Administration (EIA), which are due later today at 3:30 PM CET.
Despite the latest drop in prices, analysts at OCBC believe crude will likely remain above $100 per barrel in the near term given the absence of clear signs that tensions between the United States and Iran are easing.
The bank expects the $100 level to remain broadly stable through mid-2026, far above its earlier forecast of $70, before easing toward roughly $79 per barrel in early 2027.
OCBC said the conflict has now entered its third week without any meaningful diplomatic breakthrough, leaving shipping through the Strait of Hormuz severely constrained and keeping global oil markets under pressure.
“The ongoing paralysis of shipping is forcing Gulf producers to shut down production, raising the risk that temporary disruptions will turn into more lasting supply losses,” OCBC commodity analysts said.
The bank added that mitigation measures — including alternative pipeline routes, releases of strategic petroleum reserves and continued Iranian exports — could offset up to 10 million barrels per day, but a prolonged disruption would still leave a considerable supply deficit.
OCBC warned that oil markets may now be approaching what it called a “moderately severe” supply shock scenario, with risks tilted toward further price increases if tensions persist.
Other banks and research firms have also revised their forecasts for Brent and WTI prices in response to the tensions surrounding the Strait of Hormuz.
Barclays expects Brent to average about $85 per barrel in 2026, assuming shipping traffic through the strait normalizes within two to three weeks. If disruptions extend to four to six weeks, however, prices could climb toward $100 per barrel. ANZ has also lifted its forecast for the first quarter of 2026 to $100 from $90.
Goldman Sachs forecasts Brent averaging $75 per barrel over the next three months and $71 over the next twelve months. BMI estimates prices will average $67 in the third quarter of 2026 and $69 in the fourth quarter.
Citigroup sees Brent at $75 per barrel in the first quarter of 2026, $78 in the second and $68 in the third, while Bank of America expects prices to average about $80 in the second quarter of 2026 before falling toward $65 in 2027 as supply surpluses return.
HSBC has also raised its projections, expecting Brent prices around $80 in 2026. UBS warned that a prolonged disruption to shipping through the Strait of Hormuz could push Brent above $100 per barrel, with prices above $120 likely to trigger significant demand destruction.
In a more extreme scenario, Macquarie estimates that if the Strait were closed for several weeks, crude prices could surge to $150 per barrel or even higher.
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