Erdogan's threat to cut off key pipeline works
Political tensions in Iraq drove oil to prices not seen since 2015 as crude powered towards the $60 a barrel mark. The Telegraph reports in its article Oil price hits two year high but surge loses steam before hitting $60 mark that Monday’s climbing prices spilled over into Tuesday's trading session to reach $59.50 a barrel, the highest price in 26 months, before edging back towards $58/b by the close of play.
The slow recovery of the oil market from twelve year lows at the beginning of 2016 has continued to frustrate traders as prices meander between $50 and $55 a barrel.
But a steady month long rally gained further momentum this week after Turkey’s President Recep Tayyip Erdoğan threatened to cut off a key pipeline used to export oil from the Iraq’s Kurdistan region ahead of the province’s vote on independence despite strong opposition from Iraq’s government.
The move could wipe between 500-600,000 barrels a day from the market which, when combined with major supply cuts from the world’s largest oil producers, could bring a temporary squeeze to the well-supplied market.
“According to our trade flows research, exports of Kurdish crude have ramped up in the last few months, reaching multi-year highs of 520,000 bpd in August,” said Shakil Begg, a market analyst at Thomson Reuters.
Mr Begg said Brent crude prices cooled later in the session as traders took the higher prices as an opportunity to sell and lock in a profit before the next-month contract expires.