Tension in Iraq sparks rise in the oil price

OIL PRICES rose on Thursday, spurred by rising tension around northern Iraq following the Kurdistan region’s vote in favour of independence in a referendum.

Brent crude was up 40 cents at $58.30 a barre. It hit a more than two-year high of $59.49 on Tuesday after Monday’s referendum vote prompted Turkey to threaten to close the region’s oil pipeline.

US light crude was 40 cents higher at $52.54 after reaching a five-month intra-day high of $52.86. “Kurdistan and Northern Iraq now export 500,000-550,000 barrels per day (bpd). That would be a big loss to the market,” said Tamas Varga, analyst at brokerage PVM Oil Associates.

Turkey promised on Thursday to deal only with the Iraqi government on crude, “restricting oil export” operations to Baghdad, the office of Iraqi Prime Minister Haider al-Abadi said.

US crude also found some strength from a surprise fall in US stocks. US crude inventories fell 1.8 million barrels last week, the US Energy Department said, versus forecasts for a 3.4 millionbarrel build.

The outlook for oil demand has strengthened, analysts say.

The International Energy Agency earlier this month raised its 2017 global oil demand growth estimate to 1.6 million bpd from 1.5 million bpd, citing stronger than expected demand growth in the United States and Europe.