Oil held near $115 (€87.50) a barrel today, close to a nine-month high, and was headed for its second weekly gain on increased risks of disruption to supply from Iraq.
Oilfields south of Baghdad, which export at least 2.5 million barrels per day (bpd) of oil, are unaffected. But the fighting in the north, and foreign oil firms beginning to pull out staff, pose a risk to supplies.
"The events unfolding in Iraq will continue to dictate the direction on the market and support the oil price for the time being at a high level," said Barbara Lambrecht, analyst at Commerzbank in Frankfurt.
Brent crude slipped 15 cents to $114.91 a barrel at 9.30am GMT, after reaching $115.71 yesterday, the highest since Septmber 9th, 2013. US crude slipped 2 cents to $106.41.
US president Barack Obama said yesterday he was sending up to 300 US military advisers to Iraq, as government forces battled Sunni rebels for control of Baiji, Iraq's biggest oil refinery.
The fighting in Iraq has highlighted how outages have put a squeeze on surplus oil production capacity. Iraq's northern exports of about 300,000 bpd have been offline since March, while output has also been hit by unrest in fellow OPEC member nation Libya, sanctions on Iran and oil theft in Nigeria.
Brent was up about 1.2 per cent for the week, after rising 4.4 per cent last week.
The Baiji refinery, 200 km north of Iraq’s capital, was transformed into a battlefield, threatening Iraq’s domestic energy supplies.
A government spokesman said at one point yesterday that Iraqi forces were in “complete control”. But a witness in Baiji said fighting was continuing.
Mr Obama, speaking after a meeting with his national security team, said he was prepared to take “targeted” military action later if deemed necessary. But he insisted that US troops would not return to combat in Iraq.
Reuters
