Oil prices moved lower this morning after an agreement between Iraq and Turkey helped ease supply concerns linked to the blockade in the Strait of Hormuz.
Brent crude was trading around $102 per barrel, down about 1%, after briefly dipping below the $100 level earlier, while U.S. WTI crude fell back to approximately $93.40 per barrel.
The decline followed Iraq’s announcement that part of its crude exports will once again be transported by pipeline to a Turkish port. The move, enabled by an agreement with the authorities of Iraqi Kurdistan, allows shipments to bypass the Strait of Hormuz.
In a statement, the state-run company responsible for northern Iraqi oil fields confirmed “the start of operations at the Sarlo pumping station, with the resumption of pumping and export of oil from Kirkuk to the Turkish port of Ceyhan, with an initial export capacity of 250,000 barrels per day.”
The Ministry of Natural Resources of the Kurdistan Region also confirmed that operations began at 6:30 a.m. local time (4:30 a.m. GMT) to export oil “through the Kurdistan pipeline to the Turkish port of Ceyhan.”
Following the outbreak of war in the Middle East on February 28—triggered by the joint Israeli-U.S. offensive against Iran—Iraq, one of the founding members of OPEC, had suspended its oil exports entirely. The country normally exports roughly 3.5 million barrels per day, and authorities had been searching for alternatives to the Strait of Hormuz after Iran effectively rendered the passage inaccessible.
However, according to estimates cited by Bloomberg, the reopening of the pipeline is expected to only partially restore export volumes to pre-war levels.
Meanwhile, reports suggest the United Arab Emirates could assist the United States with maritime operations in the Strait of Hormuz, potentially becoming the first country to respond positively to Donald Trump’s appeal for international support to secure the strategic shipping route.
Additional developments affecting oil markets came from U.S. inventory data released overnight, which showed a larger-than-expected increase in crude stockpiles.
Figures from the American Petroleum Institute (API) indicated that inventories rose by 6.60 million barrels last week, whereas analysts had expected a decline of around 0.6 million barrels.
The API figures often provide an indication of the official U.S. inventory data published by the Energy Information Administration (EIA), which is scheduled for release later today at 3:30 PM CET.
Despite the pullback in prices, analysts at OCBC believe oil will likely remain above $100 per barrel in the near term given the lack of clear signs of de-escalation in the conflict between the United States and Iran.
According to the bank, the $100 threshold could remain stable through mid-2026, significantly higher than its previous forecast of $70, before easing toward about $79 per barrel by early 2027.
OCBC noted that the conflict has now entered its third week without any credible diplomatic progress, leaving shipping through the Strait of Hormuz heavily restricted and maintaining pressure on global oil markets.
“The ongoing paralysis of shipping is forcing Gulf producers to shut down production, raising the risk that temporary disruptions will turn into more lasting supply losses,” OCBC commodity analysts said.
The bank added that mitigation efforts—including alternative pipeline routes, releases from strategic reserves, and continued Iranian exports—could offset up to 10 million barrels per day. Even so, a prolonged disruption would still leave a substantial gap in global supply.
OCBC warned that the oil market may now be approaching what it described as a “moderately severe” supply shock scenario, with risks skewed toward further price increases if tensions continue.
Several other banks and research institutions have also revised their oil price forecasts as tensions around the Strait of Hormuz persist.
Barclays expects Brent to average about $85 per barrel in 2026, assuming shipping traffic through the strait returns to normal within two to three weeks. If disruptions last four to six weeks, however, the bank says prices could climb toward $100 per barrel. ANZ has also raised its forecast for the first quarter of 2026 to $100 from $90.
Goldman Sachs projects Brent averaging $75 per barrel over the next three months and $71 over the next twelve months. BMI forecasts an average of $67 in the third quarter of 2026 and $69 in the fourth quarter.
Citigroup expects Brent to average $75 in the first quarter of 2026, $78 in the second quarter and $68 in the third quarter, while Bank of America anticipates an average of around $80 in the second quarter of 2026 before prices decline toward $65 in 2027 as supply surpluses return.
HSBC has also revised its projections upward, expecting Brent prices around $80 in 2026. UBS warned that a prolonged disruption to shipments through the Strait of Hormuz could push Brent prices above $100 per barrel, with levels exceeding $120 likely to trigger significant demand destruction.
In a more extreme scenario, Macquarie estimates that if the Strait were closed for several weeks, crude prices could surge to $150 per barrel or even higher.