Comments
Oil markets jumped on Monday as Iraqi forced entered the oil city of Kirkuk, taking territory from Kurdish fighters and raising concerns over exports from OPEC's second-largest producer.
Iraq had launched the operation in the multi-ethnic region on Sunday as the crisis between Baghdad and the Kurdish Regional Government (KRG) escalated. Tensions have been building since the KRG voted for independence in a September 25 referendum.
International Brent crude futures were at $57.75 per barrel at 0733 GMT, up 58 cents from the previous close, after trading as high as $58.13. US WTI crude was at $51.95 per barrel, up 50 cents. Earlier in the day, it traded as high as $52.22.
Iraq crisis
“The escalation in Northern Iraq is the main driver," Commerzbank analyst Carsten Fritsch told the Reuters Global Oil Forum. “Oil supply from this region is at risk.”
Prices tempered gains as an Iraqi oil ministry official said oil and gas production in Kirkuk was “proceeding normally", and that Kurdish leaders had agreed to avoid fighting in oil and gas facilities.
The conflict heightened worries over oil exports. Kirkuk accounts for 200,000 barrels per day (bpd) of the some 600,000 bpd of oil produced in the KRG region. Turkey has threatened to shut a KRG-operated pipeline that goes to the Turkish port of Ceyhan at Baghdad's request.
US sanctions against Iran
Prices were also underpinned by worries over renewed US sanctions against Iran.
US President Donald Trump had on Friday refused to certify that Tehran is complying with the accord even though international inspectors say it is.
Under US law, the president must certify every 90 days that Iran is complying with the deal. Congress now has 60 days to decide whether to reimpose economic sanctions on Tehran.
During the previous round of sanctions, roughly 1 million bpd of Iranian oil was cut off. Analysts said that while renewed sanctions were unlikely to curtail that level of exports again, they warned that such a move would be disruptive.
US oil rig explosion
Cuts to US drilling rigs, and an explosion overnight at an oil rig in Louisiana's Lake Pontchartrain, also boosted prices.
Drillers cut five oil rigs in the week to October 13, bringing the total count to 743, the lowest since early June, Baker Hughes energy services firm had said late on Friday.
Oil consumption has also been strong, especially in China, where the central bank governor said on Monday that the economy is expected to grow by 7 per cent in the second half of this year, defying widespread expectations for a slowdown.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.