|A drop of gasoline is seen coming out of a fuel nozzle at a gas station in Sydney. ( Bloomberg)|
The international benchmark surged above $114 on June 13 for the first time in nine months as militants routed the Iraqi army in the north and advanced toward Baghdad, threatening to ignite a civil war. The Islamic State in Iraq and the Levant, known as ISIL, has halted repairs to the pipeline from the Kirkuk oil field to the Mediterranean port of Ceyhan in Turkey.
The conflict threatens output in OPEC’s second-biggest crude producer. The Persian Gulf country is forecast to provide 60 percent of the group’s growth for the rest of this decade, the International Energy Agency said June 13. Global consumption will “increase sharply” in the last quarter of this year and OPEC will need to pump more oil to help meet the demand, according to forecasts from the Paris-based IEA.
“We’ve been waiting for the other shoe to drop in this tightly balanced market and now it’s happened,” Katherine Spector, a commodities strategist at CIBC World Markets Inc. in New York, said June 13 by phone. “There have been lurking risks but nobody was projecting how quickly things would turn worse.”
Brent for July settlement increased 39 cents to $113.41 a barrel on the London-based ICE Futures Europe exchange on June 13, the highest close since Sept. 9. Vikas Dwivedi of Macquarie Group Ltd. predicts Brent will average $116 in the fourth quarter. He was the best forecaster of Brent prices in the first quarter, according to Bloomberg Rankings. (Bloomberg)