Erdogan's threat to cut off key pipeline works

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.

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