Oil prices dropped nearly 2% on Monday following the resumption of oil flows from Iraq's northern region via Türkiye over the weekend – also coupled with OPEC+ plans for another oil production hike in November – which would boost global supply outlook.
Brent crude futures dropped $1.13, or 1.6%, to $69.00 a barrel by 11:54 a.m. GMT after settling at their highest since July 31 on Friday. U.S. West Texas Intermediate crude was down $1.22, or 1.9%, at $64.50.
"Ongoing fears of production increase are limiting gains, but a tight near-term outlook has crude prices in a vice as the trading week begins," said Michael McCarthy, CEO of investor platform Moomoo Australia and New Zealand.
Crude oil flowed on Saturday through a pipeline from the semi-autonomous region in northern Iraq to Türkiye for the first time in 2-1/2 years, after an interim deal broke a deadlock, Iraq's oil ministry said.
The agreement between Iraq's federal government, the Kurdistan Regional Government (KRG) and foreign oil producers operating in the region will allow 180,000 to 190,000 barrels per day (bpd) of crude to flow to Türkiye's Ceyhan port, Iraq's oil minister told Rudaw on Friday.
The U.S. had pushed for a restart, which is expected to eventually bring up to 230,000 bpd of crude back to international markets at a time when OPEC+ is boosting output to gain market share.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, or OPEC+, meanwhile, will likely approve another crude production hike of at least 137,000 bpd at its meeting on Sunday, as rising oil prices encourage the group to try to further regain market share, three sources familiar with the talks said.
However, OPEC+ has been pumping almost 500,000 bpd less than its targets, defying market expectations of a supply glut.
"As OPEC prepares to further draw down its spare capacity, the risk of an October geopolitical surprise continues to rise," said analysts at RBC Capital Markets.
"While the dominant summer narrative has been the Q4 2025 oversupply story, market participants are starting to factor in the accelerating wake-up risk posed by the ongoing Russia and Iran conflicts," RBC analysts said.
Monday's price decline followed weekly gains of more than 4% for both benchmarks last week after Ukrainian drone attacks on Russian energy infrastructure hit the country's fuel exports.
"Ukraine naturally smells blood here ... If anything, Ukraine will likely double up on its strategic attacks on Russian refineries," SEB analysts said.
Russia pounded Kyiv and other parts of Ukraine early on Sunday in one of the most sustained attacks on the capital since Russia's invasion in 2022.
Meanwhile, the United Nations has reinstated an arms embargo and other sanctions on Iran over its nuclear program. Tehran has warned that the measures will bring a harsh response.
