Oil prices to suffer a heavy blow? Kurdish oil to be unblocked soon, Vitol likely to take over exports.

Some media reports, citing sources familiar with the matter, suggest that Iraq is negotiating with one of the most influential giants in the crude oil transport sector - the commodity trading giant Vitol, to handle crude oil sales once the crude oil exports from the Kurdistan region of the country resume after a two-year halt. This news is seen as negative for the international crude oil benchmark, Brent crude oil prices, which have been weak so far this year. The resumption of Kurdish oil exports is expected to increase expectations of "oversupply in the oil market," which could lead to a possible rebound in Brent crude oil prices in the short term. If a new reconciliation eventually ends the shutdown, the participation of the world's largest independent oil trading company in Iraq's northern region could accelerate the global flow of crude oil. Amanj Raheem, Secretary of the Cabinet of the Kurdistan Regional Government, stated that exports could resume as early as 6 am local time on Saturday. In other words, it is not "Vitol taking over the government's oil sales," but rather ownership and pricing rights: still held by the Iraqi government side (SOMO) (usually at the official selling price OSP); sales and logistics execution will be entrusted to Vitol in locations such as jayhan port in Turkey to handle crude oil exports, external sales, arrange deliveries, and settlements, equivalent to the role of a marketing agent/underwriter; for international oil companies operating in the region, Vitol may also sell their allocated oil on their behalf. The resumption of crude oil shipments from the Kurdish region could also allow Vitol to recover the payments owed to them by the Kurdistan regional authorities from the agreement reached before the shutdown in 2023, including "cash-for-oil" style loans. A spokesperson for Vitol declined to comment. SOMO did not immediately respond to requests for comment. According to the International Energy Agency, the global oil market is on the brink of significant oversupply, and the return of Kurdish oil will only exacerbate this oversupply situation further. Media reports have previously suggested that the pipeline's initial resumption could bring approximately 230,000 barrels of crude oil to the international market per day, and this amount could increase further. Iraq, a major oil-producing country in the Middle East, produces an average of about 4.2 million barrels of crude oil per day this year, with most of the crude oil exported to buyers in Asia through the Basra port in the south of the country.