[HOUSTON] Oil prices rose US$1 on Thursday (Jul 16) after drones struck Iraqi Kurdistan oil fields for a fourth day, pointing to continued risk in the volatile region.
Brent crude futures settled at US$69.52 a barrel, up US$1.00, or 1.46 per cent. US West Texas Intermediate crude futures finished at US$67.54 a barrel, up US$1.16, or 1.75 per cent.
Officials pointed to Iran-backed militias as the likely source of attacks this week on the oilfields in Iraqi Kurdistan, although no group has claimed responsibility.
Oil output in the semi-autonomous Kurdistan region has been slashed by between 140,000 and 150,000 barrels per day, two energy officials said, more than half the region’s normal output of about 280,000 bpd.
“Some of the gains are reaction to drone attacks in Iraq,” said Andrew Lipow, president of Lipow Oil Associates. “It shows how vulnerable oil supplies are to attacks using low technology.”
Markets have also been jittery while waiting for the imposition of tariffs by US President Donald Trump, which could shift oil supplies from the United States to India and China, Lipow said.
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Trump has said letters notifying smaller countries of their US tariff rates would go out soon, and has also alluded to prospects of a deal with Beijing on illicit drugs and a possible agreement with the European Union.
“Near-term prices (are) set to remain volatile due to the uncertainty over the final scale of US tariffs and the resultant impact on global growth,” said Ashley Kelty, an analyst at Panmure Liberum.
US crude inventories fell by 3.9 million barrels last week, government data on Wednesday showed, compared with analysts’ expectations in a Reuters poll for a 552,000-barrel draw.
Last week, the International Energy Agency said that oil output increases were not leading to higher inventories, which showed markets were thirsty for more oil.
Markets were continuing to look for signals of tighter supply or higher demand, said Phil Flynn, senior analyst for Price Futures Group.
Meanwhile, a tropical disturbance in the northern Gulf of Mexico was not expected to develop into a named storm as it makes its way west before moving onshore in Louisiana later on Thursday.
Rainfall totals in South-east Louisiana are forecast to be about four inches (10 cm), according to the US National Hurricane Center. REUTERS
