Oil rises as fighting escalates in Iraq’s oil-rich Kirkuk

Oil rises as fighting escalates in Iraq’s oil-rich Kirkuk

LONDON - Reuters
Oil rises as fighting escalates in Iraq’s oil-rich Kirkuk

Oil markets jumped on Oct. 16 as Iraqi forces entered the oil city of Kirkuk, taking territory from Kurdish fighters and raising concerns over exports from OPEC’s second-largest producer.

Iraq launched the operation in the multi-ethnic region on Sunday as the crisis between Baghdad and the Kurdish Regional Government (KRG) escalated.

Tensions have been building since the KRG voted for independence in a Sept. 25 referendum.

Brent crude futures were at $58.10 per barrel at 10.53 GMT, up 93 cents from the previous close. U.S. WTI crude was at $52.14 per barrel, up 69 cents.

“The escalation in Northern Iraq is the main driver,” Commerzbank analyst Carsten Fritsch told the Reuters Global Oil Forum.

Oil supply from this region is at risk.”

The government said its troops had seized Kirkuk airport and taken control of Iraq’s North Oil Company.

While an Iraqi oil ministry official said oil and gas production in Kirkuk was “proceeding normally,” and that Kurdish leaders had agreed to avoid fighting in oil and gas facilities, the action unsettled the market.

Kirkuk accounts for 200,000 barrels per day (bpd) of the some 600,000 bpd of oil produced in the KRG region, and Turkey has threatened to shut a KRG-operated pipeline that goes to the Turkish port of Ceyhan at Baghdad’s request.

Renewed worries over U.S. sanctions against Iran also drew attention in the market.

Oil, Kirkuk, KRG