Oil Prices Climb Again Amid Escalating Violence In Iraq
Grand Ayatollah Ali al-Sistani, the highest religious authority for Shi'ites, on Friday urged his followers to take up arms against Sunni militants advancing south toward Baghdad, raising the prospect of further violence.
"Right now the market is looking for a comfort zone," said James Williams, an energy economist at WTRG Economics in London, Arkansas. "Should the militants reach Iraq's oil patch, then we have a potential for much higher prices."
Brent futures gained 39 cents to settle at $113.41 per barrel, the highest since Sept. 9. U.S. crude oil gained 38 cents to settle at $106.91 per barrel, the highest level since Sept. 18. The spread <CL-LCO1=R> between the two benchmarks closed at $6.50.
Brent was set to gain more than 5 percent this week, the biggest weekly rise since last July, while U.S. crude was on track for its biggest weekly jump since December.
The bulk of Iraq's current oil exports come from south of Baghdad, still far from the Islamist rebel fighters. Should the militants advance south of the capital, analysts expect them to encounter much greater resistance.
Iraqi exports from the north are considered safe for the moment, analysts said, as the major Kirkuk oil hub is held by Kurdish forces.
Obama said the insurgency so far had not caused major disruptions to oil supplies from Iraq, but that if insurgents took control of refineries, other oil producers in the Middle East would need to help "pick up the slack."
"Concerning as the latest events in Iraq may be, they might not for now, if the conflict does not spread further, put additional Iraqi oil supplies immediately at risk," the Paris-based agency said.
The IEA said on Friday that OPEC would need to produce 1 million barrels per day (bpd) more oil on average in the second half of 2014 to balance the global market, which will see a steep seasonal spike in demand.
The bullish assessment contrasted with the view of OPEC, which on Thursday said extra production would be more than sufficient to meet growing demand.
(Additional reporting by Julia Payne and Christopher Johnson in London and Manash Goswami in Singapore; Editing by Dale Hudson, Bernadette Baum and Chizu Nomiyama)