Oil hits nine-month high on Iraq conflict
NEW YORK: Brent crude hit a nine-month high of more than $115 a barrel Thursday, as concerns persist that ongoing violence in Iraq could limit oil supply from OPEC’s second-biggest producer.
The Baiji refinery, 200 km (130 miles) north of the Iraqi capital near Tikrit, remained under siege. If the 300,000 barrels per day refinery stays closed, Baghdad will need to import more oil products to meet its own domestic consumption, further tightening oil markets.
“This would stress an already reasonably tight global balance further, depending on its duration,” oil analysts at Vienna-based consultancy JBC Energy said in a note to clients.
Brent rose 75 cents to $115.01 a barrel by 12:30 p.m. (1630 GMT), its highest intraday since Sept. 9.
The US crude oil futures contract for July, which expires on Friday, rose 19 cents to $106.16. Although fighting continued north of Baghdad, the conflict has not yet spread to the southern regions, where most of Iraq’s 3.3 million bpd of oil production is processed.
Uncertainty over potential export disruptions out of Iraq has, however, led to little volatility in the oil market this week.
“The market is behaving rather realistically. It’s reacting to fundamentals of supply and demand instead of threats, and that’s rather unusual,” said James Williams, an energy economist at WTRG Economics in London, Arkansas.
Although Brent was poised for a third day of gains, fears over supply disruptions in Iraq might not be enough to support Brent prices further up.