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LONDON — Brent crude oil held steady near $114 a barrel yesterday, with traders watching developments in Iraq for the possibility of export disruption from Organisation of Petroleum Exporting Countries’ (Opec’s) second-largest producer.
Oil hit a nine-month high a week ago on the fear that conflict in Iraq could split the country and hit oil exports, but it has since retreated slightly as production has been largely unaffected by the fighting.
Iraq’s southern oilfields, which produced most of the nation’s 3.3-million barrels a day, remained safe, United Nations (UN) special envoy to Iraq Nickolay Mladenov said.
But insurgents and Iraq government forces continued to fight on Wednesday for control of the country’s largest refinery, the 300,000 barrels a day Baiji complex, with troops being airlifted into the site by helicopter.
“(The oil price) is not far from the year’s high and will pop up again if there are further incursions into Iraq towards Baghdad or the southern oilfields,” CMC Markets analyst Michael Hewson said.
Brent crude had slipped 15c to $113.85 a barrel by 8.25am GMT, having fallen in the past four sessions after hitting its highest since September at $115.71 last Thursday.
Militants attacked one of Iraq’s largest air bases and seized control of several small oilfields on Wednesday as US special forces troops and intelligence analysts arrived to help Iraq security forces counter the mounting Sunni insurgency.
However, there were hopes that oil exports could increase from Kurdistan, which would counter any potential slowdown of shipments from the south.
Iraq’s self-ruling Kurds outlined plans on Wednesday to ramp up oil exports now that their forces have seized control of Iraq’s main northern oilfields.
US crude fell 4c to $106.46 a barrel. It had gained 47c in the previous session on news Washington would allow exports of condensate, an ultra-light oil, in a marginal relaxation of a 40-year ban on US oil exports.
Enterprise Products Partners, one of two companies given Department of Commerce approval on Tuesday to export condensate, said it could start exporting any time.
Stocks rise
Also putting pressure on prices, US crude inventories unexpectedly rose by 1.74-million barrels last week to 388-million barrels, data from the US government’s Energy Information Administration showed.
Mr Hewson said disappointing economic data from the US in the previous session was helping to cap oil prices.
“Global growth remains weak so there are no demand factors pulling us higher,” he said.
Investors are also keeping an eye on the threat of further sanctions on Russia by Western powers if Moscow does not do more to defuse the conflict between pro-Russian separatists and Kiev in eastern Ukraine.
Meanwhile, two weeks of talks between Iran and six world powers to reach a final agreement over Tehran’s nuclear programme would start in Vienna on July 2, Russia’s ambassador to the UN said. – Reuters
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