Iraq, Iran, US "raise" oil prices

Lucy Hill
October 19, 2017

After months of range-bound trading during which Opec-led supply cuts supported crude values but rising United States output capped markets, prices have moved up significantly this month.

The price for Brent crude oil was up 1 percent at 9:06 a.m. EDT to $58.47 per barrel.

U.S. West Texas Intermediate (WTI) crude futures were trading at $51.76 per barrel, down slightly from their last settlement, but still some 2 percent higher than last Friday, and nearly a quarter above mid-June levels.

The Iraqi forces entered Kirkuk after weeks of unrest in the region despite tensions that prevail between Baghdad and the Kurdistan Regional Government (KRG). There were unconfirmed reports that Kurdish forces had shut around 350,000 barrels per day (bpd) of oil production from major fields.

Jeff Brown, president of consultancy Facts Global Energy (FGE), said at the Reuters Global Commodities Summit last week that one potential upside for oil prices would be the us imposing fresh sanctions on Iran.

Short-term market metrics lingering from a US hurricane gave support to crude oil prices Wednesday, even though balance seemed slow to emerge.

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That, along with Iraqi forces taking control of Kurdish oil facilities in Northern Iraq, are threatening supply. The conflict can significantly impact crude supplies from the region, which host major oilfields. For 2018, The EIA forecasts crude prices around $50.57, up 2% from the previous outlook and production to increase 0.8% to 9.92 million barrels a day.

With ongoing supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) further tightening the market, analysts were revising upward their crude price forecasts for the rest of the year and into 2018. "The latest bout of geopolitical premium to strike the energy complex remains alive and well as oil prices build on recent gains", said Stephen Brennock, analyst at London brokerage PVM Oil Associates.

US President Donald Trump refused to confirm Iran's compliance over a nuclear deal that has left Congress 60 days to consider implementing new sanctions against the country.

During the previous round of sanctions against Iran, about 1 million bbl/dd of oil was cut from global markets.

The euro slipped 0.2 percent to $1.1799 and was poised for its third straight day of losses on lingering concerns about the eurozone after a conservative Austrian leader secured a victory in parliamentary elections at the weekend.

The American Petroleum Institute (API), an industry trade group, will release US weekly petroleum inventory data at 4:30 p.m. EDT (2030 GMT), ahead of the government's report on Wednesday.

Other reports by TheDailyFarc

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