Brent Drops Below $114

Source: Reuters 6/24/2014, Location: Middle East

Brent crude slipped below $114 a barrel, as data showing near-record high oil exports from Iraq indicated supplies remained unaffected by the escalating violence at the OPEC's No. 2 producer.

Exports from Iraq's southern terminals averaged 2.53 million barrels per day (bpd) up to June 21, according to shipping data and Reuters sources, even as Sunni Islamist insurgents have captured swathes of territory in northwest and central Iraq.

This compared with May's average of 2.58 million bpd - the highest since 2003.

"The oil markets look going softer unless the Sunnis start blowing up refineries or ports which they won't do because it cuts off income," said Jonathan Barratt, chief executive of Sydney commodity research firm Barratt Bulletin.

Brent crude dropped 27 cents to $113.85 by 0415 GMT, off a nine-month top of $115.71 reached last Thursday. The benchmark closed 0.6 percent down on Monday, it's biggest drop since May 16, as Iraq supply worries eased.

U.S. crude fell 49 cents to $105.68 a barrel, after falling 1 percent in the previous session, its biggest slide since late May.

Direct U.S. intervention in the Iraq crisis, with air strikes or other military action, could lead to a spike in oil prices, but Barratt said he does not expect the United States to take such tough action given Secretary of State John Kerry's comments.

Kerry promised "intense and sustained" U.S. support for Iraq, but said the divided country would only survive if its leaders took urgent steps to bring it together.

President Barack Obama has offered up to 300 American advisers to Iraq but stopped short of granting Baghdad's request for air strikes to counter the advance by Sunni militants.

"I think oil prices should go lower unless the U.S. can be seen as an aggravator," Barratt added.

U.S. oil prices, however, could draw support from forecasts for a drop in crude inventories last week.

A Reuters survey forecast U.S. crude stocks fell 1.3 million barrels on average last week, while product stockpiles rose.

Industry group the American Petroleum Institute will release its weekly data later in the day followed by the U.S. Department of Energy's Energy Information Administration.

Investors are also keeping an eye on other geopolitical events, such as the impact on oil and energy prices from a potential peace deal between Ukraine and pro-Russian separatists.

Leaders in two main rebel areas of Ukraine's east will observe a ceasefire with Ukrainian forces until June 27 in a move that will run parallel with a truce by Ukrainian forces as Russia is urged by the European Union to back the peace pact.

Crude exports from Libya's Hariga port have again been blocked by protesting guards demanding unpaid wages, a spokesman for operator Arabian Gulf Oil Co said on Monday.

For more information about related Opportunities and Key Players visit Iraq Oil and Gas Projects

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