Oil prices dropped on Wednesday, shedding some of the sharp gains made on Tuesday after the Iraqi government and the Kurdistan region authorities reached an agreement to resume oil exports through the Turkish port of Ceyhan. This deal has eased some concerns regarding oil supply disruptions in the Middle East. However, with persistent tensions surrounding the U.S.-Israeli conflict involving Iran, which has significantly disrupted oil shipments in the region, Brent crude futures had previously exceeded $100 per barrel during the last four trading sessions.

Following a rise of over 3% on Tuesday, Brent crude futures fell by 2.2% to $101.17 per barrel at the time of writing, while West Texas Intermediate crude dropped 3.5% to $92.75. According to Iraqi Oil Minister Hayyan Abdul Ghani, oil flow from Ceyhan is expected to commence at 0700 GMT on Wednesday. Oil sector officials indicated last week that Iraq aims to pump at least 100,000 barrels of crude oil daily, which reflects a significant step towards stabilizing Iraq's oil production capacity amid ongoing geopolitical uncertainties.

This agreement between Baghdad and Kurdistan is a critical development for both regions' economies, highlighting the fragile nature of oil markets that are heavily influenced by geopolitical events. The resumption of exports could provide a much-needed boost to revenues, though the continued unrest in the region underscores the volatility and risks associated with oil price fluctuations, suggesting that the market will remain sensitive to any further developments in the Middle East.