Brent crude dropped below $105 per barrel on Friday, after US military jets bombed militant positions in Iraq, a move analysts sad may lower the possibility of shipment disruptions from the second-largest producer in the OPEC.
Brent oil climbed on Thursday on news that the United States was weighing air strikes on the Islamic State fighters, who have made gains across Iraq’s semi-autonomous Kurdish region. However, the run stopped on Friday after the Pentagon said the US military was intervening in the north of the country.
US crude prices cut gains and were almost flat today.
“In essence we find U.S. air strikes more bearish than bullish for oil as the act finally draws a line not to cross for IS and re-enforces both the stability in south Iraq and in Kurdistan,” Oliver Jacob of Switzerland-based Petromatrix is quoted by Reuters as saying in a note to traders.
Brent declined 73 cents to $104.71 per barrel by 12:29, down from a weekly peak of $106.85 reached earlier in the session.
US crude dropped 1 cent to $97.33 per barrel, after exchanging at as high as $98.45.
Both gauges reversed their upward trend in mid-morning session, as initial concerns over escalating fighting in Iraq were overshadowed by the appreciation that the US intervention in the Kurdish region could protect oilfields in the north and beyond in the more high-throughput region further south.
“In the longer term, the U.S. getting involved is probably bearish for oil because any support the Kurds get increases the probability that they are able to retake the oil fields and territory from the militants,” James Williams of WTRG Economics in London, Arkansas told Bloomberg.
President Barack Obama said on Thursday that US strikes would serve to secure US personnel and Yezidis, small sect that militants have victimized. The US will strike if insurgents approach Erbil, where its diplomatic personnel are stationed.
To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at firstname.lastname@example.org