Crude oil prices faced renewed volatility as a stronger US dollar and signals of expanding global supply pressured energy markets this week. As the dollar climbed against major currencies, oil contracts slipped in value, capturing traders’ attention while competing supply-demand headlines emerged.
Multiple factors converged: Iraq approaches a deal to resume oil exports to Turkey, potentially boosting global supply.
Meanwhile, Ukraine’s barrage against Russian oil infrastructure continues, triggering concerns over restricted flows. As these trends overlap, analysts debate which force will matter most in the weeks ahead.
Why is the dollar influencing crude oil prices now?
Recent gains in the US dollar have weighed heavily on international crude prices. That’s because oil is traded globally in dollars, so exporters and importers must adjust for currency changes.
When the dollar strengthens, oil becomes costlier outside the United States, curbing demand and putting downward pressure on benchmark prices, as seen this week.
The US Dollar Index (DXY) rose by 0.28% recently, widening the gap between crude’s nominal price and what global buyers pay in local currencies.
As a result, the energy sector saw October crude contracts fall by 0.87% and gasoline futures decline by 1.54%. Analysts note that when monetary policy tightens or economic uncertainty rises, this effect is particularly noticeable.
Did you know?
Vortexa uses satellite tracking to estimate the volume of stationary crude oil aboard tankers globally, a method rarely used before 2015.
What’s the impact of Iraq resuming oil exports?
On the supply side, Reuters reported Iraq’s preliminary green light to restart pipeline oil exports via Kurdistan through Turkey. That potential export deal could add at least 230,000 barrels per day to international flows, enough to weigh on market expectations and undercut crude prices in the near term.
Market watchers immediately pointed to the risk of oversupply, especially after previous outages kept Iraqi volumes off the market.
The International Energy Agency also updated forecasts, now estimating a global surplus of more than 3.3 million barrels per day in 2026 if OPEC+ and others move forward with planned production increases.
The sense of a pending glut restricts price rallies despite sporadic supply fears elsewhere.
How do Ukraine’s refinery attacks fit into the picture?
While extra barrels from Iraq may soften prices, Ukraine’s military actions create upside risks. This month, Ukraine intensified drone and missile strikes on Russian refineries and export infrastructure, curbing Russia’s crude-processing runs to just under 5 million barrels per day, the lowest monthly average in over three years.
The attacks included hits to the Salavat, Volgograd, and Kirishi refineries, temporarily halting a combined refining capacity of 300,000 barrels per day.
These disruptions reduce the volume of Russian crude available on world markets. In turn, they offer support for oil prices even as Iraqi flows rise.
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Are OPEC+ strategies steady or shifting?
Alongside geopolitical events, OPEC+ is gradually reversing two years of output cuts. The group recently decided to boost production by 137,000 barrels per day in October, less than previous increases but signaling a path to restore 2.2 million barrels per day by September 2026, contingent on market health.
Crude output from OPEC members rose by 400,000 barrels per day in August, reaching 28.55 million barrels daily, the highest since 2023.
Still, producers stress flexibility, hinting subsequent supply decisions will respond to data, ensuring oversupply does not erode prices too quickly.
Could inventory trends shape near-term oil prices?
At the inventory level, data from the US and global tanker tracking show supporting signs for crude. The Energy Information Administration said US crude stocks fell to 4.7% below the five-year average, with gasoline and distillate inventories also running low.
Lower storage may help prices rebound if supply threats worsen. Vortexa’s tanker analytics reveal stationary crude oil volumes fell sharply in mid-September, signaling less idle supply.
If combined with unexpected disruptions or new sanctions, such as potential new US or G7 moves against Russian oil markets, they may tighten unexpectedly in the coming weeks.
As currency strength, geopolitical risk, and supply dynamics compete for dominance, oil remains vulnerable to sudden shocks in the future.
Whether prices will keep sliding or find support depends on the next round of policy moves and any major shifts on the ground in key oil-producing regions.
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