Iraq Says It Has U.S. Deal to Ship Oil Through Hormuz as Drone Shuts Kurdistan Gas Field, Brent Near $97

Brent crude fell about 16% last week, its steepest weekly drop since the start of the COVID pandemic. The Iran war's effects on Iraq, the Gulf and the oil market show up in several new details this Monday, Nov. 9.

Iraq says it has a Hormuz lane

Iraq reached an understanding with the United States on Sunday, Nov. 8, to export oil through the Strait of Hormuz via a shipping lane near Oman, Foreign Minister Fuad Hussein said in an interview with Al Jazeera.

Hussein put Iraq's losses from the war and from disrupted oil exports at $60 billion.

No U.S. official has been quoted confirming the arrangement, and the sources give no volumes or start date.

Shipping through Hormuz remains disrupted, and both the U.S. and Iran have reported attacks on vessels in or near the strait.

Drone halts Khor Mor gas field

In Iraq's Kurdistan region, production at the Khor Mor gas field stopped after a drone hit an LPG storage tank on Sunday. The fire was still burning Monday.

Power generation in the region reportedly dropped by about 2.8GW. Iraqi Prime Minister Ali al-Zaidi said initial assessments showed no casualties.

No group has claimed the attack. Joint field operator Dana Gas had already shut Khor Mor in July over security concerns before resuming production later that month.

Houthis claim Riyadh strike

The Iran-aligned Houthis claimed responsibility for a Sunday attack on Saudi Aramco's offices in Riyadh. It blew out windows. No casualties have been reported.

In Russia, Governor Alexander Drozdenko said the Kirishi oil refinery caught fire after a Ukrainian drone attack on the region Monday.

Prices and the glut forecast

Oil traded in a range Monday. Brent was down $1.65, or 1.7%, at $96.67 by 0830 GMT, and at $97.57 by 1011 GMT. WTI was at $89.87 and then $90.45 over the same span. Earlier in the session Brent had briefly sat at $98.35. U.S. equity markets have not opened yet.

President Trump told CNN that renewed strikes on Iran are "highly unlikely" while talks progress. "It depends on whether or not they sign a very strong agreement," he said. "The answer is, highly unlikely it's going to be necessary."

He had hinted at resuming attacks after last week's midterm elections. There has been no sign of a large-scale U.S. military operation. Iran has said it would respond to any attack by striking U.S. and Israeli targets.

JPMorgan said in a Friday report that the market is heading toward a glut. It cited recovering Middle Eastern flows, rising output elsewhere and weak demand. The bank estimated a global surplus of 1.1 million barrels per day in September, widening to 1.4 million in October.

Saxo Bank analyst Ole Hansen said oil is trading lower "on hopes of a US-Iran peace deal rather than concrete signs of progress." UBS analyst Giovanni Staunovo pointed to weakness in the physical market and still-elevated flows out of the Middle East.

Analysts warn the optimism is ahead of the facts

Sugandha Sachdeva, founder of New Delhi-based SS WealthStreet, said the market is pricing in "a relatively optimistic scenario of de-escalation, even though a comprehensive agreement between Washington and Tehran has yet to materialise."

She said that without a meaningful diplomatic breakthrough and sustained normalization of Hormuz shipping, crude will keep a geopolitical risk premium. She sees near-term support at $93 for Brent.

Tim Waterer, chief analyst at KCM Trade, called Trump's remarks "more measured." He said the market is waiting to learn whether the midterms produced a lasting shift in Trump's approach or "just another temporary change in tone."

Traders are asking whether the Iraqi lane becomes real export volume. A signed U.S.-Iran agreement would also move the price, and none has been announced. Until then, Sachdeva's $93 Brent level is the support figure analysts are watching.