Iraq has secured a temporary agreement with Turkey to continue critical oil exports through the Iraq-Turkey Pipeline (ITP) to the Ceyhan port. The one-year protocol, effective until July 2027, pauses a potential economic crisis by keeping the northern export route operational. Currently, oil exports from Iraq’s Kirkuk fields are at 250,000 barrels per day, far below the pipeline’s 1.6 million bpd capacity. This development comes as Iraq grapples with a significant drop in southern output due to the Strait of Hormuz blockage, stemming from ongoing conflict involving Iran.

Key Takeaways

• The temporary agreement between Iraq and Turkey appears to stabilize oil supplies, potentially supporting increased confidence in oil prices.
• Markets show increased activity, with the likelihood of WTI Crude Oil reaching $130 in July 2026 rising slightly, suggesting cautious optimism.
• The pricing of oil futures appears consistent with a scenario where supply remains stable, but geopolitical tensions could still impact future movements.

What to Watch

Observers should monitor the ongoing negotiations between Iraq and Turkey for a long-term pipeline agreement, which could influence market stability. Developments in the Strait of Hormuz, particularly any changes in its operational status, could further impact oil prices. Additionally, announcements from OPEC+ and any geopolitical shifts in the region may provide further indications of oil market trends.

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