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Iraq Continues to Support Oil Price

Crude prices were on a more even keel Monday, despite violence in Iraq over the weekend that threatened to tip the oil-producing country even further into chaos. Brent crude was up 0.1% $114.93 a barrel on ICE Futures Europe, after a gain of 2.1% last week that took it to fresh nine-month highs. WTI was up 0.2% at $107.06 a barrel on the New York Mercantile Exchange. Prices have for over a week reflected tension in Iraq, where rebel groups have surged through cities in the north and west. The rebel group, known as ISIS, hasn’t yet approached major oil producing areas in the south, so the price increases have so far been based on anxiety rather than the interruption of supply. Brent’s "current price increase is very much reminiscent of its surge in the late summer of 2013, when it was the threat of a military strike against […]

Posted On : Published By : Tom Whipple
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Brent Rises Near Nine-Month High on Iraq

Brent traded near the highest level since September and West Texas Intermediate gained as militants in Iraq seized more territory and President Obama warned that the crisis may spill over into other countries. Brent futures climbed as much as 0.7 percent in London . Fighters from the Islamic State in Iraq and the Levant took control of Iraq’s border crossings with Jordan and Syria , Hameed Ahmed Hashim, a member of the Anbar provincial council, said by phone yesterday. A Chinese manufacturing gauge rose to a seven-month high in June, indicating that the economy of the world’s second-biggest oil user is picking up. “We see further price gains, regardless of the fact that oil supply remains unaffected” in Iraq, Carsten Fritsch , an analyst at Commerzbank AG in Frankfurt , said by e-mail. “It’s fear that drives prices up, not real supply disruptions. The latter remain very unlikely.” Brent […]

Posted On : Published By : Tom Whipple
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Oil rises on Iraq conflict, upbeat China data

HONG KONG (AP) — The price of oil rose Monday, with global crude hovering near a nine-month high, after Islamic militants captured more territory in Iraq and a report on Chinese manufacturing indicated that the No. 2 economy is on the mend. In a blitz through Iraq’s western desert over the weekend, the insurgents captured four towns and three border crossings on the country’s frontiers with Jordan and Syria, greatly expanding territory under their control in the country’s north. "Any spillovers of fighting into the oil-producing southern parts of Iraq will likely take oil, in particular the Brent prices (already buoyed at US$115 a barrel) up by another leg," Mizuho Bank analysts in Singapore said in a report. Brent crude, used to price international oils, jumped 63 cents to $115.44 a barrel in London, close to last Thursday’s $115.71, its highest level since Sept. 9 last year. Benchmark U.S. […]

Posted On : Published By : Tom Whipple
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Bullish Oil Wagers Reach Record as Fighting Engulfs Iraq

Hedge funds increased bets on rising crude prices to a record as fighting in Iraq threatened to disrupt supply from OPEC’s second-biggest member. Speculators raised their net-long position in benchmark West Texas Intermediate by 4.3 percent in the week ended June 17, U.S. Commodity Futures Trading Commission data show. Futures reached a nine-month high on June 13 after fighters from the Islamic State in Iraq and the Levant, or ISIL, seized the northern city of Mosul and advanced toward Baghdad . While production remains unaffected in the south, home to about three-quarters of Iraq’s output, companies including Exxon Mobil Corp. (XOM) and BP Plc (BP/) began evacuating employees. “The betting is that there’s a greater chance that the price will go up further,” Michael Lynch , the president of Strategic Energy & Economic Research in Winchester, Massachusetts , said by phone on June 20. “The fighting is almost certainly […]

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Iran signals may accept snap nuclear inspections

An Iranian nuclear official says the country may accept snap inspections of its atomic facilities should Iran and world powers reach a final agreement over Tehran’s contentious nuclear program. In 2003, Iran accepted the so-called "additional protocol" of snap inspections for two years, but parliament never ratified it. Quoted by official IRNA news agency, atomic energy organization spokesman Behrouz Kamalvandi said: "The government may accept the additional protocol based on its expediency and progress in the nuclear talks, but Iranian parliament makes the final decision." Iran and world powers – the five permanent members of the U.N. Security Council plus Germany – are negotiating to reach a final deal, with the next round convening July 2. The West suspects Iran’s nuclear program has a military dimension, a charge Iran denies.

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Saudi Arabia's Ability to Plug Oil Gap May Be Limited

Saudi Arabia may be willing to use less than half of its declared oil-producing spare capacity to make up for any possible supply shortfalls in Iraq, according to several Gulf officials, meaning its ability to act as a supplier of last resort could be restricted. The Gulf producer, the only country with a significant base of idle capacity, has often said it could ramp up its production to 12.5 million barrels a day in the event of unexpected disruption to oil supplies elsewhere. But Gulf oil officials say that pumping anywhere near that level and sustaining it is only possible on paper. "Saudi Arabia is now producing around 9.7 million barrels a day. Our best case scenario is seeing its output rising by another 1 million barrels a day or 1.3 million if the oil market is in a disastrous state," one Gulf official at the Organization of the […]

Posted On : Published By : Tom Whipple
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Saudi Arabia’s Ability to Plug Oil Gap May Be Limited

Saudi Arabia may be willing to use less than half of its declared oil-producing spare capacity to make up for any possible supply shortfalls in Iraq, according to several Gulf officials, meaning its ability to act as a supplier of last resort could be restricted. The Gulf producer, the only country with a significant base of idle capacity, has often said it could ramp up its production to 12.5 million barrels a day in the event of unexpected disruption to oil supplies elsewhere. But Gulf oil officials say that pumping anywhere near that level and sustaining it is only possible on paper. "Saudi Arabia is now producing around 9.7 million barrels a day. Our best case scenario is seeing its output rising by another 1 million barrels a day or 1.3 million if the oil market is in a disastrous state," one Gulf official at the Organization of the […]

Posted On : Published By : Tom Whipple
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Total Evacuates Expatriates From Baghdad

French oil company Total SA (TOT, FP.FR) has evacuated its two expatriates from Baghdad as a safety measure on concerns that the Iraqi capital could be targeted by militants led by the Islamic State of Iraq and al-Sham, or ISIS. Total’s two expatriates were evacuated around a week ago, a spokesman for the company said. The decision echoes that of several other foreign oil and gas companies, which have moved to either repatriate their staff or their nonessential workers or at least stand ready to do so, as the ISIS offensive in northern Iraq has spread toward the south and several oil fields. Total has no operations in Iraq’s southern oil fields but has acquired interests in several blocs in Iraqi Kurdistan, which hasn’t been targeted by the militants. Asked whether the company had any workers in Iraqi Kurdistan and if so whether it was considering […]

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Iraqi Kurdish Government Says it Has Delivered Oil Tanker to Buyer

Iraq’s autonomous Kurdish government has successfully delivered a cargo of its oil to buyers for the first time–setting a precedent that could deepen a standoff with Baghdad. The challenge to Iraq’s central government–which opposes the Kurdish sales–comes as it is already battling a successful push by Sunni militants in the North of the country. The destination of the oil appears to be Israel–a move that would put the Middle East nation at odds with U.S.’s support for Baghdad. In a statement late Saturday, the Kurdish Regional Government said one million barrels of its oil piped through the Turkish port of Ceyhan "was safely delivered to the buyers." According to the Fleetmon shipping-tracking Website, a vessel loaded with Kurdistan oil transhipped its cargo to a second tanker that has now reached waters of the port of Ashkelon in Israel. It’s unclear if […]

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Iraq’s Military Seen as Unlikely to Turn the Tide

As Iraqi Army forces try to rally on the outskirts of Baghdad after two weeks of retreat, it has become increasingly clear to Western officials that the army will continue to suffer losses in its fight with Sunni militants and will not soon retake the ground it has ceded. Recent assessments by Western officials and military experts indicate that about a quarter of Iraq ’s military forces are “combat ineffective,” its air force is minuscule, morale among troops is low and its leadership suffers from widespread corruption. As other nations consider whether to support military action in Iraq, their decision will hinge on the quality of Iraqi forces, which have proved far more ragged than expected given years of American training. Even now, fighters with the militant Islamic State in Iraq and Syria are consolidating their gains, extending their hold on Euphrates River valley towns, securing access […]

Posted On : Published By : Tom Whipple