A member of the Kurdish Peshmerga forces takes up position with his weapon as he guards a section of an oil refinery, which is being brought on a truck to Kalak refinery in the outskirts of Erbil, in Iraq'sKurdistan region, July 14, 2014. By Staff Writer | Al Arabiya News
Monday, 11 August 2014
Brent crude oil reached near $105 a barrel on Thursday as the security situation deteriorated in northern Iraq and militants made gains against Kurdish Peshmerga forces, advancing closer to the autonomous region's oilfields.
Brent crude was up 40 cents at $104.99 a barrel by 1350 GMT, after closing at $104.59 on Wednesday, its lowest finish since Nov. 7.
Two car bombs killed nine people in the Kurdish-held Iraqi oil city of Kirkuk, police and medical sources said, after an offensive by Islamic State fighters that has routed Kurdish forces.
Traders said production in Iraq's northern oilfields was increasingly at risk as the fighting escalated.
"The situation there is certainly not getting better at the moment. It's hard to see a near-term solution there," said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.
"I think the market should keep in mind that oil production from the north part of Iraq cannot be expected."
U.S. crude was up 12 cents at $97.03 a barrel, after reaching a six-month low of $96.69 in the previous session.
Islamic State of Iraq and Syria (ISIS) militants have extended their gains in northern Iraq, seizing more towns and strengthening a foothold near the Kurdish region.
Shares in Oslo-listed oil producer DNO fell as much as 24 percent on news of the insurgents' advance, heightening fears among investors in firms exposed to the Kurdish region.
The company said its operations at the Kurdish Takwe field near Iraq's Turkish border had not been affected.
Van Cleef said the market impact would be limited as long as Iraq's mass-producing southern oilfields were unaffected.
"As long" as the oil exports from the southern part of Iraq are not affected then, for the impact on oil prices, we would expect it to increase risk premiums but that's basically it," he said.
Oil prices have fallen more than $10 a barrel over the past six weeks, as global supply exceeded demand, despite unrest in North Africa and the Middle East and an escalation in tensions between Russia and the West.
Moscow imposed a ban on imports of many Western foods in retaliation against sanctions over Ukraine, a stronger-than-expected measure that isolates Russian consumers from world trade to a degree unseen since Soviet days.
Last Update: Monday, 11 August 2014 KSA 19:59 - GMT 16:59