Brent oil jumps to two-year high
Brent crude surged Monday to its highest point in more than two years as Turkey threatened to shut down Kurdish oil shipments through its territory.
Futures climbed 3.8 percent in London, and the U.S. benchmark rose to the highest since April.
Turkey can choose to “close the valves” on oil exports from Kurdistan, Turkish President Recep Tayyip Erdogan said as the Iraqi region holds an independence referendum. Meanwhile, OPEC and its partners implemented more than 100 percent of their agreed cuts last month, and the outlook for global demand has improved.
“It’s pretty clear the Kurds are going to vote for independence and we will have yet another geopolitical hot spot in the Middle East that threatens a significant amount of oil supply,” said John Kilduff, a partner at Again Capita. At the same time, “the cooperation and the strong effort by OPEC is registering with the market.”
Crude prices have risen more than 10 percent this month in New York as U.S. refiners recovered from Hurricane Harvey and OPEC and the International Energy Agency sweetened their worldwide demand forecasts. Concerns over excessive supplies from the U.S. are also easing. American explorers reduced the number of rigs searching for crude last week to the lowest level since June.
“The implication here is that with drilling activity in the United States moderating, it’s going to be very likely that we will not get the robust increases that many had expected from U.S. shale,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto.
Brent for November settlement advanced $2.16 to close at $59.02 a barrel on the London-based ICE Futures Europe exchange, the highest level since July 2015.
West Texas Intermediate for November delivery added $1.56 to settle at $52.22 a barrel on the New York Mercantile Exchange. Brent traded at a premium of $6.80 to WTI.
Gasoline and diesel prices also rose, as rough Atlantic seas are said to hamper crude deliveries to at least two East Coast refineries.
On Wall Street Monday, stocks fell as selling in large-cap technology shares intensified, while Treasuries advanced with gold after North Korea ratcheted up tensions with the United States.