Oil prices surge after militants seize Iraqi cities
Anxiety is increasing over the possibility of disrupted production. We're in the gas-guzzling summer season, too.
Oil prices shot higher Thursday, after the seizure of two Iraqi cities by militants shook market confidence in the reliability of the country's crude exports.
The price of a barrel of Brent crude reached $112.29 on London's Intercontinental Exchange, just 10 cents below the 2014 high. U.S. WTI crude, traded on the New York Mercantile Exchange, rose above $106 a barrel for the first time since September 2013.
Although very little of Iraq's crude exports are yet affected by the attacks on Mosul and Tikrit, prices soared on concern that violence could spread south to where the vast majority of the country's production is concentrated.
"It's purely a fear-factor hitting right now," said Torbjorn Kjus, oil analyst at DNB Markets in Norway. "Right now it's $2 up, and it could easily go up more than that based on developments" such as a move of violence southward, he said.
Iraq's Oil Minister Abdul Kareem Luaiby, speaking at a meeting of the Organization of the Petroleum Exporting Countries in Vienna on Wednesday, described Iraq's southern oil-producing sites that include the export terminal at Basra as "very, very safe."
Commerzbank analysts said Mr. Luaiby's statement "appears almost farcical" as the government in Baghdad increasingly appears to be losing control over wide areas of the country.
Iraq had its most productive postwar month in February, pumping 3.6 million barrels of oil every day. Now production is around 3.3 million-3.5 million barrels a day, according to analysts.
Exports from northern Iraq have been halted for months because of damage to the pipeline that runs to the Turkish port of Ceyhan, cutting off some 250,000 barrels a day.
The nascent flow of oil from Iraqi Kurdistan hasn't yet been affected, but volumes are small and subject to objections by Baghdad, which sees them as a breach of sovereignty.
—Sarah Kent and Emre Peker contributed to this article.
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JUST BEND OVER ....
What is abundantly clear is that the same scenario will continue to play out ad-infinitum. In our Federal government and our 'illustrious' bought-and-paid-for Congress we have one of the most corrupt, incompetent and incapable institutions on the planet. The government's collusion with the insatiable greed and avarice of Big Oil, The Big Banks, the Wall Street 'casino boys', the other Fortune 500 Corporations, their CEO's and the Wealthy / Elite creates a situation where the only thing the average American can do is to bend over, 'assume the position' and get poked in the posterior with yet another pointy projectile. Case closed. Peace to all ~
Why do more than 300 million americans put up with the crap in Washington? That baffles me.
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