- July Brent crude hit a nine-month high of $114.69/bbl earlier today, but has since stabilized at ~$113 after the IEA said Iraqi oil supplies are not at immediate risk; most of Iraq’s oil production, export facilities and reserves are in the largely Shia areas in the south, where Islamist rebels enjoy little support.
- But such a forecast assumes the conflict doesn't spread; if it does, there is "no doubt" that Brent could reach $125/bbl and beyond, says PVM Oil Associates' David Hufton, who adds that Saudi Arabia has 2M bbl/day of capacity it can turn on fairly quickly but that leaves no spare capacity margin.
- Even if the insurgents don't advance to the south, the long-feared fragmentation of Iraq along sectarian lines has been set in motion, which damages the outlook for investment and production growth in Iraq in coming years, a period when Iraqi supply additions are critical to market balances, according to analysts at Energy Aspects.
- ETFs: USO, OIL, UCO, SCO, DTO, BNO, DBO, CRUD, USL, UWTI, DWTI, DNO, SZO, OLO, OLEM, TWTI
at Zacks.com (Nov 14, 2014)