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Oil climbs as tensions rise over Iraqi Kurdistan's vote of independence

US light crude was 60 cents higher at $52.74 after reaching a five-month intra-day high of $52.86 a barrel

Reuters  |  London 

Representative image  | Photo: Reuters
Representative image | Photo: Reuters

prices rose on Thursday, spurred by rising tension around northern Iraq following the autonomous Kurdistan region's vote in favour of independence in a referendum.

Brent was up 60 cents at $58.50 a barrel by 0945 GMT. It hit a more than two-year high of $59.49 on Tuesday after Monday's referendum vote prompted Turkey to threaten to close the region's pipeline.

US light crude was 60 cents higher at $52.74 after reaching a five-month intra-day high of $52.86 a barrel.

"Kurdistan and Northern Iraq now export 500,000-550,000 barrels per day (bpd). That would be a big loss to the market," said Tamas Varga, analyst at brokerage PVM Associates.

voted overwhelmingly on Monday in favour of independence, prompting Turkish President to say he could use military force to prevent the formation of an independent Kurdish state and might close the "tap".

Turkey promised on Thursday to deal only with the Iraqi government on exports, "restricting export" operations to Baghdad, the office of Iraqi Prime Minister Haider al-Abadi said.

US crude prices found some strength from a surprise fall in US stocks.

US crude inventories fell 1.8 million barrels last week, the US Energy Department said, versus forecasts for a 3.4 million-barrel build.

US refiners are still returning to full operations after last month, but gasoline stocks surprisingly rose and stocks of distillates fell less than anticipated.

While this week's US data gave a mixed picture, the outlook for global demand has strengthened, analysts say.

The Energy Agency earlier this month raised its 2017 global demand growth estimate to 1.6 million bpd from 1.5 million bpd, citing stronger than expected demand growth in the United States and Europe.

Still, US crude production rose to 9.55 million bpd last week, higher than before Harvey hit the Gulf Coast.

With Brent futures commanding their highest premium over US crude in more than two years, US crude has become increasingly competitive in foreign markets and exports hit a record 1.5 million bpd last week.

That complicates efforts by the Organisation of the Petroleum Exporting Countries and other major producers to push higher through output curbs, as every rise in price encourages more US production.

First Published: Thu, September 28 2017. 17:20 IST