Oil prices up around 1 per cent Monday
Oil prices were up about 1 per cent on Monday as battles between government forces and Kurdish fighters briefly forced the closure of some production in the oil-rich region of Iraq.
Benchmark Brent crude was up 70 cents to $57.87/barrel by 2:05 p.m. EDT and US WTI rose 51 cents to $51.96. Western Canadian Select jumped 1.18 per cent, or 51 cents to $40.40/barrel.
“We’re seeing increased geopolitical tension in the Middle East providing support in the market today, namely in Iraqi Kurdistan, and some uncertainty around Iran,” Anthony Headrick, energy market analyst at CHS Hedging LLC told Reuters.
Two Iraqi oilfields located in the Kurdistan region, Bai Hassan and Avana, were closed down briefly for security reasons after Iraq launched an operation in the region on Sunday. Bai Hassan and Avana produce about 350,000 barrels per day (b/d).
By Monday, the Iraqi government reported its troops had control of Iraq’s North Oil Co and production had resumed. According to Reuters, the KRG government said they will not take steps to stop oil flowing through the export pipeline.
Relations between Baghdad and the Kurdish Regional Government deteriorated after an overwhelming vote for Kurdish independence in a recent referendum.
On Friday US President Donald Trump refused to certify the Tehran nuclear deal, saying Tehran was not in compliance with the agreement. The announcement ratcheted up tension in the Middle East.
A number of international inspectors say Iran is fulfilling its pledges concerning the pact.
US law says that the president must certify every 90 days that Iran is complying with the deal. Following Trump’s announcement, the Congress now has 60 days to decide if it will impose economic sanctions against Iran.
Previous sanctions have resulted in the reduction of about 1 million b/d of Iranian crude exports. Reuters analysts say renewed sanctions will not likely impact those exports, but they may still be disruptive.
Overnight, an explosion at an oil rig in Louisiana injured seven people, five seriously. Fox News reports one person is missing following the blast.
The Louisiana rig explosion and a smaller US rig count also boosted oil prices.
