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Commodities

Oil prices soar as Islamists advance in Iraq

Global oil prices have hit a nine-month high as Islamist militants gained ground in Iraq. Their advances are raising concerns over oil production in the world’s second largest exporter.

The price for Brent oil hit a session peak of $114.69 (84.72 euros) a barrel on Friday, its highest since September. It gained more than $3 on Thursday.

US crude touched an intraday high of $107.68, also a nine-month high, and was up 75 cents at $107.28, extending the previous session's $2.13 gain.

Brent was set for gains of more than 5 percent this week, the biggest weekly rise since July 2013, while US crude was on track for its biggest jump since December.

The spike in oil prices came as Sunni insurgents gained more ground in Iraq, moving into two towns in the eastern province of Diyala on Friday. The jihadists extended their advance to towns only about an hour's drive from Baghdad.

Oil prices rise as crisis in Iraq continues

Iraq is the second largest crude producer in the OPEC cartel after Saudi Arabia and boasts the fifth largest proven crude reserves in the world. According to the Iraqi government, the country pumps an average 3.5 million barrels a day.

The International Energy Agency (IEA) sought to play down fears over the possible loss of oil exports from Iraq, saying in it's monthly Oil Market Report that supplies did not appear to be at risk for the moment.

"Concerning as the latest events in Iraq may be, they might not for now, if the conflict does not spread further, put additional Iraqi oil supplies immediately at risk," the Paris-based agency said.

But investors are worried that violence in Iraq could disrupt supplies on oil markets, noting that another blow to supply could push up prices even further.

"There have been no disruptions to oil supplies so far but people are very nervous," Ken Hasegawa, a fund manager at Newedge in Japan, told the news agency Reuters.

The assessment contrasted with the view of OPEC, which on Thursday said extra production would be more than sufficient to meet growing demand. The cartel of 12 exporters said global oil inventories were comfortable. US stockpiles were high and commercial stocks in the main industrialized countries were sufficient at the end of April to meet almost two months of consumption.

uhe / sri (dpa, Reuters, AFP)

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