Mohanad Yakout, senior markets analyst at Scope Markets. (Image source: Scope Markets)
The oil market landscape for Q4 2025 is looking highly volatile, with rising oil exports from Iraq exacerbating oversupply concerns, says Mohanad Yakout, senior markets analyst at Scope Markets
Oil prices are hovering around US$67 as the IEA warns of a ‘looming oversupply’ outweighing geopolitical tensions in Russia and the Middle East.
Adding to pressures including the unwinding of OPEC + production cuts and higher non-OPEC production is the prospect of rising oil exports from Iraq, OPEC’s second-largest producer. The country has increased oil exports under the OPEC+ agreement, according to state oil marketing organisation SOMO, as reported by Reuters. It expects September's exports to range from 3.4-3.45 mn bpd, up from around 3.38mn bpd in August.
Baghdad is also reported to have come to a preliminary agreement with the Kurdistan region to resume pipeline oil exports from the Kurdistan region through Turkey, amounting to around 230,000 bpd, after a two-year hiatus.
“This shift comes as part of Iraq’s broader effort to boost production after a relaxation of some commitments under the OPEC+ agreement and to strengthen the country’s financial revenue,” comments Yakout.
“However, despite the clear benefits of this move in terms of revenue generation and improved financial liquidity, multiple risks loom over the global oil market as the end of 2025 approaches. First, there's the risk of oversupply, especially if the Kurdistan pipeline returns to full capacity without alignment with global demand, which is expected to remain relatively weak due to global economic conditions and the accelerating shift toward renewable energy and electric vehicles.
“Second, there are logistical, legal, and political risks related to the ongoing dispute between Baghdad and Erbil over export contracts, revenue sharing, or obligations to foreign companies. Any delays or sudden stoppages could disrupt pipeline flows and undermine investor and market confidence.
“Third, price volatility remains a major concern. Geopolitical tensions in the Middle East or the imposition of sanctions on supplies from countries like Russia could trigger sharp market swings, especially if news is conflicting or if the implementation of agreements faces obstacles.”
Yakout concludes that the oil landscape for Q4 2025 looks highly volatile.
“While the increase in exports offers an opportunity to bolster Iraq’s financial position and improve revenues, the success of this strategy depends on legal and political stability, infrastructure reliability, alignment with global supply and demand, and effective risk management. If these factors are handled properly, Iraq stands to gain significantly, but if markets are caught off guard by any serious disruptions, prices could fall, and market tensions may rise.”
