- Kurdish crude exports restart after a 2.5-year suspension, with initial flows of 150–160 kbd.
- The resumption follows a new agreement between Iraq’s federal and regional governments and oil producers.
- The renewed flows are expected to lift Aframax and Suezmax markets while reshaping Mediterranean crude trade patterns.
Exports of Kurdish crude have resumed through the Kirkuk–Ceyhan pipeline for the first time since March 2023, when flows were halted following an International Chamber of Commerce ruling ordering Turkey to pay Iraq $1.5 billion for unauthorized exports. The restart, with initial volumes of 150–160 kbd, marks the end of a two-and-a-half-year standoff. A tanker is already loading Kurdish crude at Ceyhan, signalling operational normalization.
The breakthrough came after Iraq’s federal government, the Kurdistan Regional Government (KRG), and international producers reached a deal last week. Sales will now be managed through Iraq’s SOMO at official prices, with an independent trader overseeing transactions. This arrangement could allow operators to load both Kurdish and Iraqi grades at Ceyhan and the Arabian Gulf.
Market Implications and Export Prospects
Before the shutdown, Ceyhan handled over 400 kbd of Kurdish crude, split between Aframax and Suezmax vessels. Most cargoes served Mediterranean refiners, with occasional flows to Asia depending on arbitrage economics. The restored volumes are expected to enhance crude availability in the Mediterranean, potentially creating eastbound opportunities on Suezmaxes but lowering demand for Middle Eastern barrels.While current exports stand at around 160 kbd, SOMO aims to ramp up throughput to 400–500 kbd by 2026. Such growth could challenge Iraq’s OPEC+ commitments, as the country has often exceeded its production targets. However, repayment issues persist — with around $1 billion still owed to oil producers, a mechanism for settling arrears is under discussion.
Positive Outlook for Tanker Markets
The pipeline’s reopening is a welcome development for Aframax and Suezmax owners. The Suezmax market has already enjoyed robust summer performance supported by strong CPC and Latin American exports. In contrast, Aframaxes have traded at notable discounts but could benefit from new volumes and seasonal winter demand.In the Mediterranean, Suezmax rates have remained steady around WS147.5 for Ceyhan runs, though availability could weigh on further gains. Aframax activity is expected to strengthen as charterers look ahead to winter coverage.
Broader Crude Market Overview
Across global markets, the crude segment experienced mixed fortunes this week:
- VLCCs: The AG/China route softened to WS48 amid muted activity during Asia’s Golden Week.
- Suezmaxes: West Africa–UKC eased to WS97.5 (TD20) as limited inquiry persisted.
- Aframaxes: North Sea rates rose amid weather delays, with owners targeting mid-WS140s.
In the U.S. Gulf, weak activity continued to pressure VLCC and Aframax levels, though improved pricing could soon stimulate fresh fixtures.
Product Tanker Trends
Clean tanker activity held firm in Asia despite holidays, with LR1 and LR2 markets steady at WS117.5–120 for AG–Japan runs. MR routes in both AG and UKC remained balanced, though Mediterranean Handy rates weakened sharply due to excess supply.In dirty markets, Handysize activity improved in both the Med and North Sea, with rates firming toward WS225 and WS212.5 respectively, while Panamax enquiry remained sluggish around WS135.
Rates and Bunker Snapshot
Route Change Oct 2 Sep 25
TD3C (VLCC AG–China) -19 WS 82 101
TD20 (Suezmax WAF–UKC) -13 WS 98 111
TD25 (Aframax USG–UKC) -15 WS 150 165
TC18 (MR USG–Brazil) +45 WS 264 219
Bunker Prices ($/ton): Rotterdam VLSFO $444 (↓17), Singapore VLSFO $487 (↑7), Fujairah VLSFO $485 (↑1).
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Source: Gibson
