Oil poised to gain as Kurdish referendum help curb supplies

Oil prices traded turbulently on Friday amidst profit taking. The prices for oil were of much attention as Iraq’s Kurdistan voted for referendum; helping prices pick up as political turmoil engulfs. The apprehensions about supply from the region sent the prices for Brent soaring, resulting in the best performing quarter for Brent since 2004.

U.S. crude ended Friday's session up 11 cents at $51.67 a barrel. The contract posted a fourth consecutively weekly gain and rose 12 percent in the third quarter.

Brent was up 4 cents to $57.45 a barrel by 2:16 p.m. (1816 GMT) , heading for a fifth weekly climb and a nearly 10 percent gain for September.

The expectations of strong demand forecasts have increased the prices for contracts. With the political unravelling in Kurdistan, prices are expected to witness a decent pick up during next few months. However, some analysts are of the opinion that market is overdone and may enter into a short term correction.

After Turkey declaring a complete boycott of the newly formed state, Iranian media reported that the Islamic Republic has banned transportation of any oil products between Iranian companies and Kurdistan.

With no quick solution in sight, the situation will favor prices in short term.

Almost all of the oil that comes from Kurdish region is transported from Iraq to Turkey via a pipeline, the region exports about 500,000 barrels a day through the pipeline. Kurdish Government is solely dependent on revenues from oil sales to meet its regional expenditure. With Turkey strongly condemning the referendum, the future of oil exports from the region is in a state of deadlock.

Time and circumstances are almost ripe for oil prices to pick up, with major oil suppliers decreasing their oil outputs and the Kurdish blockade will definitely help the historically low oil prices.