The Middle East seems to get worse and [comments about Tony Blair removed!] markets are understandably jittery.
Although the Brent price is off a little this morning, the July contract having expired on Friday, WTI is actually a little higher at $107.32. The White House has said that they are in ‘dialog’ with Iran which is interesting and shows just how complicated the whole situation is. It must be particularly galling to see all those arms they gave to the Iraqi forces being handed over to ISIS without actually being used…
Looking at the situation vis-à-vis the flow of oil ( George Bush jnr would say ‘what a shame the French don’t have a saying for vis-à-vis….) nothing has changed since my comments last week as the South of Iraq is still producing and exporting oil as usual and in the North the KRG is actually, at least at present, coming out of this more strongly if anything.
There are two things to remember about the oil price this summer, firstly if Iraqi production is hit in any substantive way all bets are off as you would expect. Losing 2.5m b/d would put the system under serious pressure and although there are remedies, the short-term price reaction would probably be substantially upwards.
Secondly I reiterate my view that the oil market is already looking quite tight over the summer and a report out from the IEA this morning seems to back that up. I am always very worried when the IEA agree with my thoughts as they get so much wrong but they have increased their number for call on Opec crude to 30.9m b/d in the second half of this year which in the absence of Libya and Iran let alone Iraq gives an underpinning to the oil price I have explained before.
Although the Brent price is off a little this morning, the July contract having expired on Friday, WTI is actually a little higher at $107.32. The White House has said that they are in ‘dialog’ with Iran which is interesting and shows just how complicated the whole situation is. It must be particularly galling to see all those arms they gave to the Iraqi forces being handed over to ISIS without actually being used…
Looking at the situation vis-à-vis the flow of oil ( George Bush jnr would say ‘what a shame the French don’t have a saying for vis-à-vis….) nothing has changed since my comments last week as the South of Iraq is still producing and exporting oil as usual and in the North the KRG is actually, at least at present, coming out of this more strongly if anything.
There are two things to remember about the oil price this summer, firstly if Iraqi production is hit in any substantive way all bets are off as you would expect. Losing 2.5m b/d would put the system under serious pressure and although there are remedies, the short-term price reaction would probably be substantially upwards.
Secondly I reiterate my view that the oil market is already looking quite tight over the summer and a report out from the IEA this morning seems to back that up. I am always very worried when the IEA agree with my thoughts as they get so much wrong but they have increased their number for call on Opec crude to 30.9m b/d in the second half of this year which in the absence of Libya and Iran let alone Iraq gives an underpinning to the oil price I have explained before.
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