Oil Rises After Attack on Small Oil Fields Near Iraq’s Kirkuk –

Oil rallied after attacks on small oil fields in Iraq reminded the market that the country’s security challenges haven’t yet gone away. Brent futures rose as much as 1.5%, reversing an earlier loss. Civil defense teams are trying to put out a blaze at the wells in the Khabbaz field, local police said, though the impact on production is very small.

Iraq has experienced bouts of unrest ever since the overthrow of Saddam Hussein, with Islamic State briefly curbing most exports from the country’s north. While there has been a period of relative stability for several years, the latest attacks underscore the fact that the region — where production has expanded sharply in recent years — is still prone to tensions.

Brent futures edge closer to key psychological marker

Crude’s gains were also aided by a rally in broader markets on hopes for further U.S. stimulus support. Benchmark Brent prices have been capped below $50 since OPEC+ decided to slowly add supply back to the market last week, though the development of Covid-19 vaccines has helped push prices to near a 9-month high.

“The $50 level keeps acting like a magnet to Brent,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “Considering most of the production comes from the south, the Iraq news shouldn’t have too much impact.”

PRICES
Brent for February settlement climbed 1.1% to $49.37 a barrel at 9:32 a.m. in London West Texas Intermediate for January delivery rose 1.1% to $46.09

At this stage, it looks like any disruption wouldn’t have a significant impact on total oil production or exports from Iraq or its Kurdistan region. The vast bulk of Iraq’s production comes from fields in the south of the country, while in the north most is from Kurdish controlled fields and there’s no question at this stage that those are susceptible to attack.

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