By Sam Li and Siyi Liu
BEIJING/SINGAPORE (Reuters) – Oil prices fell on Wednesday to reverse some of Tuesday’s strong gains after the Iraqi government and Kurdish authorities reached a deal to resume oil exports through the Turkish port of Ceyhan, providing modest relief to concerns about Middle East supplies.
But with no sign of an easing of the conflict with Iran, which has largely crippled Middle East oil exports, Brent futures prices have sat above $100 a barrel for the previous four consecutive sessions.
After rising more than 3% on Tuesday, Brent futures fell 67 cents, or 0.65%, to $102.75 a barrel by 0209 GMT on Wednesday. U.S. West Texas Intermediate crude fell $1.18, or 1.23%, to $95.03.
Iraqi Oil Minister Hayan Abdel-Ghani said oil flows from Ceyhan were expected to begin at 0700 GMT on Wednesday, according to state media. Two oil officials said last week that Iraq was seeking to pump at least 100,000 barrels a day of crude oil through the port.
“While it all helps and buys some time, the 100,000 bpd is not a big change as Iraq has still lost around two million barrels a day,” said Tony Sycamore, market analyst at IG.
Oil production from Iraq’s major southern oil fields, where most of its crude is produced and exported, has plummeted ‌70% to just 1.3 million bpd, sources said on March 8, as the conflict with Iran effectively closes the vital Strait of Hormuz through which about 20% of the world’s oil passes.
Iran confirmed on Tuesday that its security chief Ali Larijani had been killed in an Israeli strike. He is the highest-ranking figure attacked since the first day of the US-Israel war.
A senior Iranian official said Iran’s new supreme leader had rejected offers of de-escalation presented by proxy countries.
The US military said on Tuesday it had struck sites along Iran’s coast near the Strait of Hormuz because Iranian anti-ship missiles posed a risk to international shipping there.
Larijani’s death and U.S. military strikes on Iranian coastal positions near the Strait of Hormuz raised some hopes that the conflict could end sooner, said Mingyu Gao, chief energy and chemicals researcher at China Futures.
US crude stocks rose by 6.56 million barrels in the week ended March 13, market sources said, citing API figures from Tuesday.
A Reuters poll showed that US crude oil stockpiles were expected to have increased by about 380,000 barrels in the week to March 13.
(Reporting by Sam Li in Beijing and Siyi Liu ​in Singapore; Editing by Stephen Coates and Neil Fullick)