Oil prices surged from October 13 through October 18 as fighting
between Iraqi and Kurdish forces intensified, threatening supplies from
northern Iraq, while markets await changes from US Congress on sanctions
targeting Iran demanded by US President
Donald Trump to stave off a US withdrawal from the deal.
But oil prices fell for a second consecutive day on October 20, as
traders considered the potential impact of ongoing geopolitical risks on
global oil supply.
Brent crude fell nearly 1%, to $56.67 a barrel on London’s
Intercontinental Exchange, according to the WSJ. On the New York
Mercantile Exchange, WTI was trading down 1.15% at $50.70 a barrel.
Crude prices climbed earlier this week after clashes between Iraqi
government troops and forces from the semi-autonomous Kurdish region
disrupted some oil production and exports. Kurds voted nearly
unanimously to break away from Iraq in a controversial independence
referendum late September.
Meanwhile, despite the tensions in the oil-rich Kurdish region,
Russian state-owned oil giant Rosneft said on October 19 it has signed
an agreement with the Kurdistan Regional Government. "Rosneft and
Kurdistan Regional Government are continuing to build on agreements they
have reached previously,” the Russian company said in a press release.
On the sidelines of the X Eurasian Economic Forum in Verona the
parties have announced the start of joint implementation of an
infrastructure project for the operation of the oil pipeline in the
Kurdish Autonomous Region, Rosneft said.
Rosneft’s share in the project may amount to 60%. The other project
participant with 40% share will be KAR Group, who is the current
pipeline operator.
With Rosneft acquiring 60% in the project, the Russian oil company
will become a controlling stakeholder in Kurdish oil infrastructure.
"The entry into the infrastructure project will contribute to
achievement of Rosneft’s strategic objectives and will enable Rosneft to
enhance the efficiency of oil transportation to the end customers
including supplies to the Company’s refineries in Germany,” Rosneft CEO
Igor Sechin was quoted as saying in the press release.
Violence has curbed output in Iraq, which is the second-biggest
producer of the Organization of Petroleum Exporting Countries (OPEC).
Oil supplies that flow from Kurdistan, in northern Iraq, through
Turkey fell to around 196,000 barrels a day on October 19, compared with
a usual supply of around 600,000 barrels a day, according to Dutch bank
ING Group, cited by the WSJ. Iraq has sought to restore flows from
fields in the disputed region.
OPEC Secretary General
Mohammed Barkindo said on
October 19 that the agreement reached between OPEC and non-OPEC members
late last year to cap their production at around 1.8 million barrels a
day helped rebalance the crude oil market.
"There is no doubt that this market is rebalancing at an accelerating
pace,” he said in a speech at the Oil & Money conference in London.
"Stability is steadily returning and there is far more light at the end
of the dark tunnel we have been traveling down for the past three
years,” he added.
The OPEC, non-OPEC agreement was extended in May through March 2018.
Reuters reported on October 18, citing OPEC sources, that producers are
leaning towards extending the deal for a further nine months, though the
decision could be postponed until early next year depending on the
market. The oil cartel is set to officially debate a prolongation of the
deal at OPEC’s next meeting in Vienna in November.
https://www.neweurope.eu/article/iraqi-kurdish-battles-send-oil-prices-gushing-retreating/