Oil Edges Lower as Rising Iraqi Exports and Oversupply Concerns Weigh

Oil prices dipped slightly on Monday, with Brent settling at $66.57 per barrel and WTI October contracts at $62.64 per barrel, as oversupply worries outweighed geopolitical tensions in Russia and the Middle East. Iraq, OPEC’s second-largest producer, has raised exports under the OPEC+ agreement and expects September flows of 3.4–3.45 million bpd, while Kuwait also reported record production capacity of 3.2 million bpd. Market sentiment is further pressured by expectations of tapering global demand from Q3 to Q1 2026, despite recent geopolitical developments in Eastern Europe and the Middle East. Analysts highlighted the potential for China to absorb surplus oil, but uncertainty remains over whether prices could fall into the $50s.

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Iraq and Kurdistan Reach Deal to Restart Oil Pipeline to Turkey

Iraq’s federal government and the Kurdistan Regional Government (KRG) have agreed with oil firms to resume crude exports via the Turkish pipeline, restarting about 230,000 bpd suspended since March 2023. Technical preparations are expected to begin Tuesday, with oil flows potentially resuming within 48 hours, pending Iraqi cabinet approval. Under the plan, the KRG will supply 230,000 bpd to the state oil marketer SOMO and retain 50,000 bpd for local use, with an independent trader handling sales from Ceyhan at SOMO’s official prices. Payment arrangements include $16 per barrel going to an escrow account for producers, though $1 billion in unpaid arrears from September 2022–March 2023 remains unresolved. The restart comes as OPEC+ producers increase output, while negotiations with major firms like Norway’s DNO and Genel Energy continue over contract terms and past arrears.

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Kuwait’s Oil Production Capacity Hits 3.2 Million BPD, Highest in Over a Decade

Kuwait’s crude oil production capacity has reached 3.2 million bpd, the highest level in more than ten years, according to Oil Minister Tariq Al-Roumi. The country plans to increase actual output to 2.559 million bpd in October under the OPEC+ agreement, which raised production by 137,000 bpd across eight members. Kuwait’s capacity previously peaked at 3.3 million bpd in 2010 before declining below 3 million bpd, and the country aims to reach 4 million bpd by 2035. OPEC+ members continue to gradually increase output after years of cuts, with flexibility to adjust production based on market conditions.

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Angola’s Crude Production Rebounds Above 1 Million BPD

Angola’s crude output rose to 1.03 million bpd in August, recovering from 998,757 bpd in July and surpassing the one-million-barrel mark for the first time in over two years. The government aims to maintain production at around one million bpd following its exit from OPEC in 2023. Angola plans its next oil-licensing round in the fourth quarter, marking the final sale under a multi-year program that began in 2019 to award 50 concessions. Despite the production rebound, fiscal pressures remain, as oil prices remain below the $70 benchmark set in Angola’s 2025 budget, with the IMF warning of a possible 2.8% GDP deficit.

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BP Halts Rotterdam Biofuels Plant, Focuses on Co-Processing

BP has abandoned plans to build a standalone biofuels facility at its Rotterdam refinery amid weak demand and a shift back to more profitable oil and gas projects. The company has also paused or halted biofuel projects at Kwinana (Australia), Lingen (Germany), Cherry Point (US), leaving Castellon (Spain) as the only potential long-term development site. BP’s biofuels strategy now centers on co-processing at existing refineries and its BP Bunge Bioenergia ethanol operations in Brazil, producing 50,000 bpd from sugarcane. The company produced about 10,000 bpd of biofuels through co-processing and favors capital-light investments with a 15% return hurdle. Shell has similarly decided not to resume construction of its Rotterdam biofuel plant due to uncompetitiveness.

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VLCC Boom Pushes Global Shipping Earnings to Two-Year High

A surge in VLCC rates has driven global shipping earnings to their highest level in two years, with some VLCC routes reaching $100,000 per day. The rally is supported by OPEC+ unwinding production cuts, low fleet growth, and long-haul voyages increasing demand for available tonnage. Sanctions on 177 VLCCs, including restrictions on Russian oil shipments, have further tightened supply and boosted rates. Analysts highlight that low newbuilding deliveries, an ageing fleet, and trade inefficiencies due to US regulations on Chinese vessels are contributing to the strong market. Industry figures, including Frontline and Bruton executives, see the upturn as sustainable, with expectations of a multi-year rally in the VLCC sector.

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SCI Partners with Indian Refiners to Order 10 New MR Tankers

Shipping Corp of India (SCI) is forming a joint venture with Indian Oil Corp, Bharat Petroleum, and Hindustan Petroleum to expand India’s MR tanker fleet. The group has signed a memorandum of understanding to issue a tender for newbuildings at domestic shipyards, with delivery targeted for 2028. IOC is expected to own six of the tankers, while the remaining four will be split among the other refiners, with estimated prices of $55–60 million per ship. The move supports India’s ambition to strengthen its shipbuilding sector and increase self-sufficiency in shipping capacity, though some Indian shipowners have raised concerns about overcapacity. This initiative aligns with the government’s broader plan to build 112 vessels by 2040, backed by a budget of $10 billion.

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Norden CEO Welcomes IMO Green Shipping Proposal as Key to Boosting Demand for Low-Carbon Freight

Jan Rindbo, CEO of Norden, praised the International Maritime Organization’s proposed carbon policy as a “game-changer” that could help close the gap between carriers offering lower-carbon shipping and charterers willing to pay for it. Norden has already invested in greener freight solutions, including biofuel producer MASH Makes, but Rindbo noted that customer demand for green shipping is still limited. He highlighted that decarbonising tramp and dry bulk trades is challenging due to infrastructure constraints at thousands of ports, compared with liner services that are easier to fuel with next-generation fuels. The IMO policy would provide clarity, set direction, and create levies significant enough to incentivize adoption of greener fuels, potentially leveling the playing field from 2028 onwards. Rindbo emphasized that the push for green freight will be driven both by early-adopter companies and high-value commodities where the extra shipping cost is easier to absorb.