An employee works at the Tawke oil fields in the Kurdish region in northern
exporter barely causes a ripple in regional markets?
The stunning victories of the hardline Islamic State in
long-term supply worries.
Global oil benchmark Brent gained 3.2 percent from
The DME contract is more relevant for Asian crude buyers, given their reliance on heavier, more sour grades from the
And with the forward DME curve remaining in backwardation, it seems evident that there is little concern in
If they did, the curve would be tending toward contango, where prices for longer-dated contracts exceed those for shorter-dated futures.
The question is whether the market is correct in being relatively sanguine about the risks of supply disruptions from the developing conflict in
Certainly the speed at which the ISIL fighters were able to capture
The case for a limited threat to Iraqi oil supplies rests on the view that the vast majority of its exports come from the southern part of the country, which is still in government hands and is home to many supporters of Prime Minister
This assumes that if ISIL tries to capture the south, it will face more serious resistance.
That target includes 400,000 bpd from the autonomous Kurdish region and a northern pipeline to
The Kurds are also able to ship 100,000 bpd through a separate pipeline to
The crisis in
Their forces have occupied
Thus it will fall to
The Saudis are still able to ramp up output if needed, but probably not by enough to handle any major outage of Iraqi shipments.
This level is being breached - with Asian buyers of Iranian oil importing 1.25 million-1.3 million bpd in the first six months of the year - although US officials say
the overage is condensate.
Iranian Oil Minister
So far, Asian crude buyers appear to be adopting a wait and see approach to the conflict in
The risk is that while there is still enough oil globally to deal with any Iraqi disruption, much of it is lighter oil from the US shale boom, and not the heavier grades preferred by Asian refiners.
It's not just that there has to be enough oil to go around, it has to be of the right type, too, and it's here where the main risks lie for Asian crude buyers.
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