Brent crude last week capped the biggest weekly drop since March as the conflict in Iraq spared the country’s main oil-producing region.
Iraqi forces held the Baiji refinery, the nation’s largest, after repelling the latest attack by Islamist militants. Fighting hasn’t spread to the south, home to more than three-quarters of Iraq’s oil output. Exports from OPEC’s second-largest producer will accelerate next month, according to Iraq’s oil minister.
“Iraqi production appears to be safe for the time being,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. “That makes the market stable.”
Brent for August settlement gained 9 cents to close at $113.30 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was 37 percent below the 100-day average. Prices dropped 1.3 percent last week, the biggest decline since the seven days ended March 21.
“Oil exports will witness a big increase, as recent events didn’t reflect negatively on Iraq’s crude output and exports,” the nation’s oil minister, Abdul Kareem al-Luaibi, said in an interview in Baghdad on June 25. “International oil companies are working normally in Iraq.”
Brent has gained 3.6 percent in June as fighters from the Islamic State in Iraq and the Levant captured the northern city of Mosul and advanced south toward Baghdad. Iraq pumped 3.3 million barrels a day of crude last month, trailing only Saudi Arabia in the Organization of Petroleum Exporting Countries, data compiled by Bloomberg show.
“Oil from the south is still coming out at a pretty steady pace,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis , which oversees $1.4 billion. “You’ve got to be concerned about anything that would disrupt things further. There is enough tension out there going into the weekend and it doesn’t make a lot of sense to sell Brent.”
The Baiji refinery has been shut since ISIL insurgents tried to seize the 310,000 barrels-a-day plant June 15.
“Crude is consolidating amid light volume,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “We’re monitoring the situation in Iraq. It’s very messy in terms of politics and the insurgency but normal in terms of production.”
