Oil Prices Influenced By Kurdish Supply Risks
Oil is one of the world’s most valuable and heavily traded commodities, and its price is closely watched by investors, businesses, and governments around the globe. The price of oil can have a significant impact on the global economy, influencing everything from the cost of transportation to the price of consumer goods.
In this article, we will focus on how oil prices have been affected by the recent supply risks arising from the conflict between the Kurdish forces and the Iraqi government, as well as easing banking fears.
The Kurdish conflict has disrupted oil production and exports from Iraq, a major oil-producing nation, which has contributed to higher oil prices in the international market. Additionally, concerns over the stability of the banking system and the potential impact on economic growth have also had an impact on oil prices.
How the Kurdish Conflict Impacts the Oil Commodities Market
The Kurdish conflict in Iraq began in 2014 when the Kurdish forces, known as Peshmerga, took control of the northern region of the country to protect it from ISIS militants. The Kurdish region is one of the main players when it comes to oil trading as they have a huge amount of oil resources. However, tensions between the Iraqi government and the Kurdish authorities have been high, particularly over the control of oil revenues.
The Kurdish conflict has had a significant impact on the oil market, leading to higher oil prices due to concerns over supply disruptions. The conflict has disrupted oil production and exports from Iraq, which is one of the largest oil-producing nations in the world. The Kurdistan region alone produces about 550,000 barrels of oil per day, which is nearly 15% of Iraq’s total oil production. The conflict increased pressure on oil prices globally.
The conflict has also caused significant instability in the region, leading to fears of broader geopolitical risks. These fears have further fueled oil price increases, as investors are concerned about potential supply disruptions from other major oil-producing nations in the Middle East.
International institutions and countries have taken various approaches to the Kurdish conflict. The United States has been supportive of the Kurdish forces, providing military aid and training to help them fight against ISIS. However, the U.S. has also expressed support for the unity and territorial integrity of Iraq, which has put it at odds with the Kurdish authorities.
Meanwhile, Turkey, a neighbouring country to Iraq, has taken a harder stance against the Kurdish authorities, viewing them as a threat to its national security. Turkey has been involved in military operations against Kurdish forces in Syria and has threatened to do the same in Iraq.
Traders in the oil market have closely monitored the Kurdish conflict and its impact on oil prices. It made predictions even harder as makes the future unclear. However, some analysts believe that as the conflict subsides and oil production in Iraq stabilizes, oil prices may begin to decrease.
In conclusion, the Kurdish conflict in Iraq has had a significant impact on the oil market, leading to higher prices and increased uncertainty. While the conflict is ongoing, it remains to be seen how it will ultimately affect the oil market and what steps will be taken to address the underlying tensions.
Current Situation on the Oil Market and Impact of the Kurdish Conflict
On Tuesday, crude oil prices rose slightly, building on gains from the previous day, driven by the risk of supply disruptions from Iraqi Kurdistan and optimism that the banking sector turmoil was contained. Brent crude futures increased by 0.7% to settle at $78.65 a barrel, while West Texas Intermediate U.S. crude settled at $73.20 a barrel, up 0.5%. The prices jumped by over $3 on
Monday following Iraq’s suspension of exports of 450,000 barrels per day from the northern Kurdistan region through Turkey after a decision that Baghdad’s consent was necessary to ship the oil. The potential for a prolonged outage of Kurdish exports until the end of the year could raise the price of Brent crude by $3 a barrel, according to experts. In addition, the acquisition of Silicon Valley Bank by First Citizens BancShares sent European bank shares higher and boosted market sentiment.
Furthermore, recovering demand in China and Russia’s focus on increasing energy exports to friendly nations were supportive factors for oil prices. China’s crude oil imports are expected to grow by 6.2% in 2023 to 540 million tonnes, while Russia reported a 22-fold increase in oil supply to India last year. However, a preliminary Reuters poll suggested that U.S. crude oil stockpiles might rise by 200,000 barrels last week, with gasoline stocks expected to fall.
Additionally, French industrial strikes have debilitated the country’s refineries and hindered fuel deliveries, which has led to a decline in European crude prices as market players looked to sell.