Report: Crude Oil Futures Soar on Iraq Unrest

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June 12, 2014 by   Comments Off on Report: Crude Oil Futures Soar on Iraq Unrest

Crude-oil futures soared Thursday (June 12), with the U.S. benchmark poised for its highest close in about nine months as unrest in Iraq intensified, raising concerns about disruptions to global oil supplies.

Militants reportedly took full control of the northern oil city of Kirkuk and vowed to march to Baghdad.

“For now, the conflict is located in the north of the country, but it seems that the market may be concerned that it could spread toward the producing fields in the south, given that Brent prices have moved up by around $2 in the last 24 hours,” said analysts at JBC Energy, in a note.

July crude oil, the U.S. benchmark, tacked on $1.76, or 1.7%, to $106.16 a barrel on the New York Mercantile Exchange after trading as high as $106.53 in electronic trading. Tracking the most-active contracts, futures prices haven’t settled above $105 since Sept. 19, 2013.

Adding to a strong run seen in European trading hours, Brent crude for July delivery remained up $1.90, or 1.7%, to $111.85 a barrel on the ICE Futures exchange. A close above $111 would mark the second time for a most-active Brent contract this year. Oil prices shot up in March on rising tensions over Russia and Ukraine.

“The situation in Iraq is immensely serious, but in a post-shale oil universe, how does the oil trading market price this?,” said Richard Hastings, macro strategist at Global Hunter Securities.

“It becomes difficult to estimate the price in the event of a disruption in oil exports from Basra, so the markets are also afraid of being exposed in long positions, and then get clobbered in case the situation stops short of disrupting Basra,” he said. The port city is located in southeastern Iraq.

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