Oil prices were broadly higher on Monday morning after Iraqi troops advanced towards Kirkuk, an oil-rich region in Kurdistan that recently declared independence from Baghdad. Also fueling the price increase were renewed fears that there will be fresh U.S. sanctions against Iran. The Iraqi national army has already taken control of nearby areas claimed by the Kurds without notable opposition thus far.
U.S. WTI was trading up 0.84 percent to $51.88 per barrel as of 2:03 p.m HK/SIN, and Brent crude futures were up 1.08 percent to $57.79 per barrel.
Kurdish-controlled areas of Iraq are among the most productive in the country and they control much of Iraq’s producing infrastructure. Traders are concerned that continued fighting over these regions could impact production and harm the critical infrastructure.
Likewise, traders are now looking towards the potential of new U.S. sanctions against Iran to push oil prices higher after U.S. President Donald Trump refused on Friday to formally certify that Tehran is complying with the 2015 Iran nuclear deal even though international inspectors have confirmed that Iran is fully compliant. According to U.S. law, the president must certify Iran’s compliance to Congress every 90 days. After Trump’s refusal to provide this certification, the U.S. Congress will now have 60 days to decide whether to impose new sanctions on Tehran.
Kuwait’s oil minister, Essam al-Marzouq, said on Sunday that there were no signs of oil supply disruptions as a result of Trump’s hardened stance or from the conflict in Iraq. “Until now there are no indications (of an impact on oil production) whether from the actions against Iran or in Iraq’s Kurdistan,” al-Marzouq told reporters in Kuwait City.
Also weighing on oil traders on Monday was an explosion overnight at an oil rig in Louisiana’s Lake Pontchartrain in which at least six people were injured.