Iraq's northern oil export route through Turkey will begin operations “this week”, Turkey's Energy Minister has said.
“Within this week, we will start operating the Iraqi-Turkey pipeline … which will be able to supply half a million barrels of oil [per day] to the oil market,” Alparslan Bayraktar, the country's Minister of Energy and Natural Resources, said during a panel session at Adipec on Monday.
In late March, Turkey halted the flow of oil produced in the region after an arbitration court ruled in favour of Baghdad, saying Ankara had breached a 1973 agreement when it allowed Iraqi Kurdish authorities to pump without Baghdad's consent.
On April 4, a deal was struck between Baghdad and Erbil to allow the federal government to market the oil produced from Iraqi Kurdistan in exchange for monthly budget transfers to the region amounting to 12.67 per cent of Iraq's oil revenue.
Iraq is Opec’s largest producer after Saudi Arabia. Oil revenue makes up about 95 per cent of the country’s income.
It sits on about 145 billion barrels of proven oil reserves and largely undeveloped natural gas totalling about 3,714 billion cubic metres.
The move to restart the pipeline will ease the tightness in the oil market.
The International Energy Agency expects a “substantial” crude market deficit in the fourth quarter of this year due to Opec output cuts.
The agency expects global oil demand to rise by 1.5 million bpd in the second half of this year, compared with the first half, exceeding supply by 1.24 million bpd during that period.
Opec, which expects a supply shortfall of 3.3 million bpd in the fourth quarter, has said China’s recent stimulus measures would help to revive growth in the world’s second-largest economy.
Brent, the benchmark for two thirds of the world’s oil, was trading 0.20 per cent higher at 11.39am UAE time on Monday. West Texas Intermediate, the gauge that tracks US crude, was up 0.23 per cent at $91 a barrel.
Oil prices recorded a weekly loss last week on profit-taking and macroeconomic concerns but rose by about 22 per cent during the third quarter.