Brent Price Nears $90 as Explosion Hits Iraq-Turkey Pipeline
Brent crude oil price inches higher, nears $90 per barrel on Wednesday as supply becomes tighter in the market following the Iraq-Turkey explosion, unrest in Libya and oil group inability to meet quotas.
Oil prices reached a new seven-year high overnight following news of an explosion at an oil pipeline carrying up to 450,000 barrels per day from the oilfields in northern Iraq to the Mediterranean port of Ceyhan in Turkey, Commerzbank said in a Wednesday note.
Brent climbed to $89 per barrel, while West Texas Intermediate rose to $87 per barrel, the bank said in its report. Operations are expected to resume shortly following the explosion, the cause of which is not yet clear, Commerzbank said.
Oil prices shed some of their gains but are still trading above Tuesday’s closing level, continuing the pattern of increasing prices following news about supply outages, but not dropping back to their previous level once the problems have been resolved, according to the bank.
In addition, the output of member countries of the Organization of the Petroleum Exporting Countries that have signed up to the agreement is now 629,000 barrels per day below the agreed level.
The International Energy Agency is set to publish its updated forecasts on Wednesday. The agency has been more pessimistic about demand and envisages a larger supply surplus.
The Organization of the Petroleum Exporting Countries expects the global oil market to remain well-supported this year by robust demand, the group said in its monthly report. It also reiterated that omicron’s impact is expected to be mild and short-lived, the bank noted.
However, OPEC also emphasized its difficulties in boosting output, as its members added 166,000 barrels per day of oil in December, falling short of its target of 250,000 barrels per day.
This is exacerbated by the increased risk of more supply disruptions amid rising geopolitical tensions following drone attacks by Yemeni fighters on facilities of the Abu Dhabi National Oil Co.
The deteriorating political stability in Libya has affected output as well, and the likelihood of an Iran nuclear deal in the short term has diminished. #Brent Price Nears $90 as Explosion Hits Iraq-Turkey Pipeline
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