EMD023 - Kurdish Resumption Impact

Energy markets open the week pulling back from last week's rally on Monday, September 29, 2025, as Kurdish oil flows resume but face immediate constraints, while geopolitical tensions provide a supportive floor. WTI crude slipped nearly 1% to $65.20 per barrel, extending last week's 5.2% gain but testing support after breaking $66 resistance. Brent fell about 1% to $69.60, building on 4.8% weekly gains while holding above $69.50. The headline development: Iraqi Kurdistan oil exports restarted Saturday through Turkey's Ceyhan port after a 2.5-year halt, but initial volumes are limited to 180,000-190,000 barrels per day, with technical constraints capping near-term flows at 300,000 bpd. This tempers the oversupply fears from last week's anticipation, as full 500,000 bpd capacity remains months away pending infrastructure fixes. The resumption adds only modest supply to global markets, estimated at 0.2% of world production. Geopolitical pressures intensified over the weekend. President Trump threatened secondary sanctions on countries buying Russian oil, targeting India, China, and Turkey specifically. The EU pushed forward its 19th sanctions package, accelerating Russian LNG phase-out to January 2027 and banning transactions with Rosneft and Gazprom Neft. Ukrainian drone strikes hit three Russian refineries, sustaining the disruption premium that fueled last week's 4.4% rally despite the supply addition. No new EIA crude inventory report today (next release October 1), but last week's data showed continued tightness with gasoline consumption down 2.1% year-over-year and distillates 8% below five-year averages. Natural gas storage built 75 Bcf last week, meeting expectations. Refinery utilization remained steady at 93% with inputs at 16.5 million bpd. Demand signals remain mixed: US gasoline consumption declined 2.1% year-over-year, signaling seasonal weakness. China's crude imports rose 4.2% month-over-month but LNG fell 15% year-to-date amid renewable substitution. OPEC+ plans another 137,000 bpd hike for November, potentially exacerbating surplus risks if Kurdish flows ramp successfully. Technically, WTI tests $65 support after Friday's momentum; a hold above $64.50 keeps upside toward $68 intact. Brent's $69.50 level is critical, with $71 resistance next. Natural gas eyes $3.00 support after reclaiming $3.40 last week. The -1% Monday dip reflects Kurdish resumption reality, but escalating sanctions and strikes maintain the geopolitical floor preventing deeper declines. This episode analyzes how energy executives should position for markets balancing modest Kurdish supply addition against intensifying geopolitical disruption risks.