Brent Oil Jumps $2 on Escalating Iraq Violence

Source: Reuters 6/12/2014, Location: Middle East

Brent crude jumped more than $2 to over $112 a barrel on worries that escalating violence in Iraq could disrupt oil supplies from the major OPEC exporter.

The Brent futures contract - an international benchmark sensitive to geopolitical turmoil - climbed $2.24 to $112.19 a barrel by 1013 GMT, its highest since early March. U.S. oil gained $1.83 to $106.23 a barrel.

An initially muted market response to news that Sunni rebels had overrun Iraq's second-largest city and moved in on its largest refinery at Baiji has given way to growing alarm as the al Qaeda splinter group appeared to make rapid advances toward the Shi'ite-led government in Baghdad.

"I would entirely ascribe this move to the insurrection in the north of Iraq ... The fear is that it will cause a threat to Iraqi oil exports," Christopher Bellew, a trader at Jefferies Bache, said.

"If this conflict knocked out Iraq as an exporter, that would have significant impact on prices ... How high could they go It depends on what happens."

Concern that the Baghdad-controlled Iraqi army was disintegrating and could no longer secure key oil facilities was exacerbated when soldiers fled the major northern oil city of Kirkuk, leaving it in the hands of the Kurdish Peshmerga forces.

However, Iraq's main oil export facilities are in the largely Shi'ite areas in the south of the country, where al Qaeda-inspired groups enjoy little sympathy.

Those facilities, which ship about 2.6 million barrels per day (bpd), were "very, very safe", the country's Oil Minister Abdul Kareem Luaibi said.

His comments came after Sunni insurgents overran Tikrit, threatening the Baiji refinery, which can process 300,000 bpd and supplies Baghdad.

Iraq's biggest oil refinery at Baiji remained under government control on Thursday after Sunni rebels' offensive through northern Iraq, the oil minister said.

Oil prices are likely to range around current levels, said Jonathan Barratt, chief executive of Sydney-based commodity research firm Barratt Bulletin, adding that it would take further signs of disruption to push values higher.

U.S. OIL STOCKS
Oil prices also drew support from last week's 2.6-million-bpd drop in crude inventories, Ric Spooner, chief market analyst at Sydney's CMC Markets, said. Analysts polled by Reuters had forecast a 1.9-million-barrel decline.

U.S. crude is expected to hold around $105 per barrel, Spooner forecast.

"In the short term I expect a widening of the WTI-Brent spread reflecting what happens in Iraq," he said.

The keenly traded spread of Brent over WTI was below $6 at 0937 GMT, with U.S. crude also facing upward pressure.

Investors were also watching for the release of key economic data from the United States later on Thursday and figures from China on Friday for industrial production and retail sales.


Brazil >>  6/17/2022 - Petrobras, regarding the news published in the media, clarifies that by request of the Chairman of the Board of Directors, its Board of Directors held...
Canada >>  6/16/2022 - PetroTal Corp. is pleased to announce the following sales related update.

720,000 barrels of oil under contract for export from Bayovar. Ap...


United States >>  6/15/2022 - ExxonMobil released the following statement in response to a letter from President Biden.

We have been in regular contact with the adminis...

United States >>  6/14/2022 - The U.S. Department of Energy (DOE) announced the fourth Notice of Sale of 45 million barrels of crude oil from the Strategic Petroleum Reserve (SPR)....

Iran >>  5/31/2022 - The managing director of the National Iranian Oil Company (NIOC) here said there is no problem regarding oil debt collection. ...
Russia >>  5/31/2022 - EU leaders urged Russia to halt its indiscriminate attacks on civilians and infrastructure, as well as to evacuate all of its troops and military equi...

Related Categories: Coal  Electricity  General  Natural Gas  Oil 

Related Articles: Coal  Electricity  General  Natural Gas  Oil 


Gulf Oil and Gas
Copyright © 2021 Universal Solutions All rights reserved. - Terms of Service - Privacy Policy.