Oil held near $115 a barrel on Friday, close to a nine-month high, and was headed for its second weekly gain on increased risks of disruption to supply from Iraq.
Oilfields south of Baghdad, which export at least 2.5 million barrels per day (bpd) of oil, are unaffected. But the fighting in the north, and foreign oil firms beginning to pull out staff, pose a risk to supplies.
“This raises the risk of production halts in the near future, so although there are no disruptions at the moment, we do see further upside to prices,” said Ken Hasegawa, a Tokyo-based commodity sales manager at Newedge Japan.
Brent crude slipped 27 cents to $114.79 a barrel at 0828 GMT, after reaching $115.71 on Thursday, the highest since Sept. 9, 2013. U.S. crude slipped 3 cents to $106.40.
President Barack Obama said on Thursday he was sending up to 300 U.S. military advisers to Iraq, as government forces battled Sunni rebels for control of Baiji, Iraq’s biggest oil refinery.
The fighting in Iraq has highlighted how outages have put a squeeze on surplus oil production capacity. Iraq’s northern exports of about 300,000 bpd have been offline since March, while output has also been hit by unrest in fellow OPEC member nation Libya, sanctions on Iran and oil theft in Nigeria.
Brent was up about 1.2 percent for the week, after rising 4.4 percent last week.
The Baiji refinery, 200 km (130 miles) north of Iraq’s capital, was transformed into a battlefield, threatening Iraq’s domestic energy supplies.
A government spokesman said at one point on Thursday that Iraqi forces were in “complete control”. But a witness in Baiji said fighting was continuing.
Obama, speaking after a meeting with his national security team, said he was prepared to take “targeted” military action later if deemed necessary. But he insisted that U.S. troops would not return to combat in Iraq.
Reuters
