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Iraq in turmoil

Published Thursday, June 12th, 2014

The risk-on environment which has recently propelled global equity indices into virgin territory evaporated yesterday as the downward revision in the global growth forecast by the World Bank took its toll on sentiment. With little else to focus on and a lack of catalysts to support risk appetite, stocks retreated from record highs in a session which was characterised by low volume and a narrow trading range.

The rather muted market reaction on Tuesday to the militant attack of the Iraqi town of Mosul has been corrected as the oil market gained ground yesterday. In the latest developments Sunni rebels have now also taken Saddam Hussein’s hometown, Tikrit, and they are closing in on Iraq’s biggest oil refinery. NATO held an emergency meeting at Turkey’s request after 80 Turkish citizens were taken hostage in northern Iraq.

This is the country with a current oil production of well over 3 mbpd so tensions that can easily spill over into the country’s oil infrastructure are obviously bullish for oil prices. WTI closed 5 cents/bbl higher and Brent 43 cents/bbl up. Heating Oil gained 202 points and RBOB 263 points. There has been no improvement in the situation overnight with Brent up another $1.30/bbl from last night’s settlement.

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Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.