Further dynamics of oil prices depends on situation in Iraq

Brent prices rose on Tuesday, June 24. By the end of trading on the IntercontinentalExchange in London August contract for Brent crude rose by $ 0.34 to close at 114.46 dollars. / Bbl. On the New York Mercantile Exchange futures price for WTI crude oil for August delivery fell 0.14 dollars to 106.03 dollars. / Bbl.

Brent prices Tuesday resumed upward movement after a break caused by profit-taking. The reason for the growth has resumed situation in Iraq , where Sunni militants continue hostilities against government forces. The crisis in Iraq is a threat of supply disruptions. And this is when the world’s oil production declined by nearly 3 million bbl. / Day due to the problems in Libya, Syria and Iran. However, the scale of growth in trading on Tuesday were small – it seems that the tension in the Middle East has largely incorporated in the price of oil.

“The situation in Iraq , no doubt, will continue to influence the dynamics of the oil market – analysts believe Commerzbank. – After fierce fighting in Iraq’s largest oil refinery in Baiji expectation was again under the control of Iraqi forces. If it is confirmed that the rebels could not ISIS provoke a supply disruption, oil prices are likely to fall even more. However the current state of uncertainty means that the sharp drop in prices is unlikely. in the next few weeks the market will be traded Brent above $ 110 dollars. / bbl. “.

All depends on the further development of the situation in Iraq , experts say. “We’ve seen profit-taking that began after last week prices reached a nine-month high. However, now the market consolidates amid uncertainty in Iraq – indicates analyst Gene McGillian Tradition Energy. – Further growth is likely to be due to actual disruptions supplies or out of control violence. “

“The focus of the market are the situation in Iraq , where the different political actors (including Iran, acting as a powerful ally of the official Baghdad) seeking opportunities for negotiations to unite against the common enemy – radical Sunni group” Islamic State of Iraq and the Levant. “otherwise, the country would be divided into a plurality of disparate fragments. potential Libyan scenario would have catastrophic consequences for the Iraqi oil industry and the market would put the threat of tangible deficit. We tend to regard this as a gloomy scenario is the least likely. However, while signs of improvement in the situation in Iraq is not observed alarmingly market participants, especially after a major increase in production capacity, which took place within a few years of relative stability. This week unstable risk premium to the price of Brent, believe, continue and carry trades will be volatile in nature. If a serious threat to supplies oil from the south of Iraq will not occur, the price of oil above U.S. $ 115-115,5 tightened up “- the analyst believes” VTB Capital “Andrew Kryuchenko.

Meanwhile, OPEC production capacity is sufficient free to close the hole, which is formed in the case of a negative development of the situation in Iraq . For example, one government representative of Saudi Arabia stated that the country could raise production to 12.5 million barrels. / Day. However, OPEC noted that Saudi Arabia has no desire to maximally use its advanced features. Current level of the country is within the 9.7 million bbl. / Day. There is a possibility that the statements about the possibilities of Saudi Arabia to produce 12.5 million barrels. bluff, given that the maximum amount of production that was achieved in August 2013 the country., is 10.2 million barrels. / day, experts stress.