Oil market nervous on Iraq-Kurdistan crisis

Tammy Harvey
October 19, 2017

Bank of America-Merrill Lynch said last week the spread, or difference, between WTI and Brent, the global benchmark, is what made USA crude oil competitive.

Short-term market metrics lingering from a USA hurricane gave support to crude oil prices Wednesday, even though balance seemed slow to emerge. E&P reports in its article Oil Prices Build As Iraq, US-Iran Tension Raises Risks that after months of rangebound trading, during which OPEC-led supply cuts supported crude but rising USA output capped markets, prices have made significant gains this month.

Despite some profit taking on Tuesday, Brent crude futures, the global benchmark for oil prices, were still at $57.79 at 0148 GMT, 2.5 percent higher than last Friday's settlement - and nearly a third above mid-year levels.

Oil prices traded higher Wednesday, supported by ongoing political tensions in the Middle East.

"If there are (new sanctions), we expect that several hundred thousand barrels of Iranian exports would be immediately at risk", Goldman said.

At the Multi Commodity Exchange, crude oil for delivery in October was trading higher by Rs 31 or 0.92 per cent to Rs 3,384 per barrel in a business turnover of 4,093 lots.

The Iraqi forces entered Kirkuk after weeks of unrest in the region despite tensions that prevail between Baghdad and the Kurdistan Regional Government (KRG).


That, along with Iraqi forces taking control of Kurdish oil facilities in Northern Iraq, are threatening supply.

Asked about the conflict in Iraq between the government and separatist Kurds and the United States decision to decertify its nuclear deal with Iran, Birol said it is premature to assess the impact of these geopolitical risks on oil markets.

In its monthly report, the Organization of the Petroleum Exporting Countries (OPEC) indicated that market rebalancing will continue amid forecasts that global oil demand will rise by around 30,000 barrels a day for this year and 2018.

U.S. President Donald Trump on Friday refused to certify Iran's compliance over a nuclear deal, leaving Congress 60 days to decide on further action against Tehran. The group is managing the global glut of crude oil after noticing the prices halve and revenues dip sharply in the recent times.

The euro traded at $1.1782, slightly down from the previous day. "Collectively, OPEC countries lost more than $1 trillion".

Prices had risen on Monday after Kurdish technicians stopped oil production in those two fields.

“We see Brent averaging $54 this quarter and $52.50 per barrel in 1H18, compared with our previous forecasts of $50 and $49.50 per barrel, respectively, ” Bank of America Merrill Lynch said.

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