Oil prices hold firm amid Iraq supply concerns

Tuesday 24 June 2014 14.40
Iraq's oil production continues to be unaffected by ongoing violence in the country
Iraq's oil production continues to be unaffected by ongoing violence in the country

World oil prices edged higher today, holding close to recent peaks amid ongoing concerns over violence in crude producer Iraq. 

Brent crude for delivery in August added two cents to $114.14 a barrel in London early afternoon deals compared with Monday's closing level.

US benchmark West Texas Intermediate for August gained six cents to $106.23 per barrel. 

The market had fallen yesterday as investors reassessed a political crisis in Iraq that remains concerning, but has yet to result in crude supply disruptions. 

"Fears that the advance of the Sunni terrorist group ISIL could result in disruptions to the Iraqi oil supply appear to be abating somewhat," one analyst said. "The situation in Iraq will doubtless continue to influence (oil) prices," he added. 

The head of OPEC today declared that there was no oil supply shortage due to the crisis in Iraq and that any increase in price on the markets was due to speculative trading. 

"Right now the market is very well supplied," said OPEC Secretary General Abdullah El-Badri, on a visit to Brussels for talks with European Energy Commissioner Guenther Oettinger.

"There is no shortage on the oil market in any place in the world. Of course there is an uprising in Iraq but this has not affected the production area," El-Badri said.

Global oil prices had struck nine-month peaks late last week on the back of the crisis but are nowhere near what analysts predict they could reach if Iraq were to halt exports. 

Jihadist insurgents have captured swathes of Iraqi territory in a lightning offensive toward Baghdad from the north and west of the country.  However, they have yet to directly threaten the key oil-producing region in the south. 

Iraqi air strikes killed at least 32 people today as security forces held off attacks on a strategic town and an oil refinery, officials and witnesses said. In the town of Baiji, north of Baghdad, air strikes killed at least 19 people and wounded at least 17 others, officials said.

Last Thursday, Brent oil soared to $115.71 a barrel - the highest point since September 9, 2013 - on worries over the Iraq crisis. New York prices hit $107.73 on Friday, a level last seen on September 19, 2013.