Brent Crude Soars to a Record on Iraq Concerns

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Brent Crude Soars to a Record on Iraq Concerns

Brent crude jumped to a nine-month high, expanding its premium over West Texas Intermediate, as Iraqi troops fought militants and energy firms evacuated staff from OPEC’s second-largest producer.

A police command statement said that Iraqi forces pushed the militant group Islamic State in Iraq and the Levant, an al-Qaeda offshoot, from Baiji refinery following an overnight battle. Exxon Mobil commenced evacuation its staff from Iraq. Brent’s premium over WTI soared for the fourth day in a row as US inventories remained close to a seasonal record.

“Fear of supply disruption remains the driver of the market. Brent-WTI is widening again, continuing to point to the sensitivity the European markets have to the events in Iraq. The fundamentals are still bearish for WTI,” analyst Gene McGillian of Stamford, Connecticut-based Tradition Energy told Bloomberg.

On the ICE Futures Europe exchange in London, August-settlement Brent added 86 cents or 0.8 cent to exchange at $115.12 per barrel as of 12:55 pm New York time.   The future earlier touched $115.27, the highest price for intraday trading since September 9. The volume of contracts changing hands on the exchange was around 11% higher than the average for past 100 days by the specific time of the day.

The per barrel price of July-delivery WTI, which expires on Friday, added 21 cents to $106.18 on the New York Mercantile Exchange.

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According to MarketWatch, the Baiji refinery, which was at the center of a fierce fight between Iraqi government forces and Sunni militants, produces oil for the domestic market, meaning that the conflict is not seen as capable of directly hurting shipments from the country’s southern oil fields and refineries.

Iraqi sends about 2.5 million barrels of oil to international markets every single day. Energy analysts caution that substantial disruptions of supplies could push prices to as a high as $125 per barrel or above.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com