17th October, MLN – Oil markets continue to be rattled by the ongoing geopolitical and political tensions. Iraq – Kurdistan standoff, adding to the rising uncertainty over the US – Iran nuclear deal have contributed to rising tide of risk into the oil markets across the world.
Oil prices spiked on Monday after Iraqi forces seized oil fields in the Kirkuk region. The said region had been under Kurdish control since 2014. The supplies were certainly disrupted but for a very brief period of time.
According to the media reports, about 350,000 bpd of oil production from the Bai Hassan and Avanna oilfields were disrupted after the fields were temporarily shut down. The stoppage sent to Brent prices soaring, as the supplies from the region continues to remain a risk. Despite a continuing supply from the region, the investors will continue to see the region as unstable and the uncertainty will be priced into the markets.
Despite some profit taking earlier on Tuesday, Brent crude futures were still at $57.82 at 0511 GMT, 2.5 percent higher than last Friday's settlement – and almost a third above mid-year levels.
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U.S. West Texas Intermediate (WTI) crude futures were at $51.78 per barrel, down slightly from their last settlement, but still some 2 percent higher than last Friday, and almost a quarter above mid-June levels.
With ongoing OPEC cuts, the Iraq – Kurdistan standoff, and the US – Iran discords on the deal have prompted investors to raise their global oil price forecasts in the coming months.
