Oil prices hold steady even as Iraq resumes some exports via Turkey

By Hanna Ziady, CNN

London (CNN) — Oil prices held steady Wednesday after Iraq clinched a deal to resume some crude exports via Turkey. It’s not a ton of oil, but it’s what amounts for good news these days as the Strait of Hormuz remains largely blocked.

Brent crude, the global oil benchmark, traded modestly higher at $103.7 a barrel. WTI, the US benchmark, dropped 1.5% to just shy of $95 a barrel.

Crude exports from Iraq’s Kirkuk oil fields are set to resume Wednesday from Turkey’s Ceyhan port after the Kurdistan Regional Government, which controls part of northern Iraq, agreed to allow oil to flow via the Kurdistan Region-Ceyhan pipeline.

Iraq’s federal government and the KRG “also agreed to take the necessary security measures to protect the oil fields and ensure the continuity of oil exports,” the KRG said in a statement Tuesday.

The pipeline exports from the Kirkuk will flow at a rate of 250,000 barrels a day, a mere “drop in the ocean,” according to Neil Wilson, a strategist at trading platform Saxo. But the resumption of those flows is still “another positive headline relative to the simmering war,” he said in a note.

For context, Iraq was producing about 4.5 million barrels of oil a day before the war started, according to the US Energy Information Administration. The near-shutdown of the Strait of Hormuz means that around 20 million barrels of crude and oil products, about a fifth of world oil supply, are choked off from the global market every day.

Separately, an Iranian security source told CNN that Tehran is in discussions with eight countries outside the Middle East to grant safe passage through the Strait of Hormuz to tankers carrying oil traded in Chinese yuan. Oil is largely traded in dollars but one exception is Russian oil, which is traded in rubles or yuan.

Brent crude settled at $103.42 Tuesday, its highest level since the start of the war, as Iran intensified its attacks on energy infrastructure in the Gulf. Crude prices are up around 40% since the United States and Israel attacked Iran on February 28.

The fact that oil traders largely ignored the news of Iraq’s oil exports means the focus remains on the duration of the war. Iran launched fresh strikes on Israel Wednesday, vowing revenge for the killing of two top Iranian leaders this week, including former security chief Ali Larijani. Two people were killed by missile shrapnel in Tel Aviv, according to police, and multiple locations in the city were struck by falling debris.

Stock markets rose for a third day. In Asia, South Korea’s Kospi climbed 5% and Japan’s Nikkei rose 2.9%, “both helped by tech stocks,” according to Jim Reid, head of global macroeconomic research at Deutsche Bank.

Hong Kong’s Hang Seng closed marginally higher on the day and European markets were also up in morning hours. US futures pointed to a stronger open.

Reid said in a note that there was “a bit more calm in (stock) markets at the moment and a small hint that there is a decoupling from the price of oil.”

Investors will now look ahead to the Federal Reserve meeting later on Wednesday for clues on how the central bank thinks moves in oil prices might affect inflation more broadly and, therefore, its decisions on interest rates.

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CNN’s Frederik Pleitgen, Mohammed Tawfeeq and Jessie Yeung contributed reporting.