Oil prices rose further Monday, spurred by increasing tensions around the conflict between Iraqi and Kurdish military.
Brent crude oil was trading around the $58 per barrel mark, while Western Texas Intermediate crude edged up to $52 per barrel.
Iraqi forces have reportedly captured some key Kurdish sites around Kirkuk, the city that’s become part of a major dispute following an independence referendum.
Iraq oil production
Iraq is the second largest OPEC-member oil producer. That means anything that has the potential to affect their oil output can hit prices. In this case, the possibility of a major disruption to Iraq’s ability to produce and export oil, has increased the value of the commodity.
Reports suggest that Iraqi forces have seized some oil installations close to Kirkuk, although Kurdish officials have denied this.
Meanwhile, Iraq’s oil ministry has said the production of oil and natural gas in the region was continuing as normal. They added there had been "an agreement with some Kurdish leaders that the oil and gas facilities should stay out of the conflict".
Demand from China remains healthy
Data published last week showed Chinese imports of oil was the second highest on record. And, as the country’s construction boom shows no signs of easing, demand for oil from China isn’t anticipated to slow any time soon.
That’s particularly the case as the country is working hard to grow its own stockpile of the valuable commodity.
Indeed, according to the International Energy Agency, China has spent some $24 billion in the last two years, on oil imports. The IEA added that China’s use and investment in oil stocks has made a significant contribution to the recent rebalancing between supply and demand.
And, they expect the country will continue to import more oil to further build its reserves, for at least another six months.
Both these developments come as OPEC has made it clear that more needs to be done to help keep the supply of oil at the right pace. That’s something that also supports the price of oil at a level producers are happy with.
Following the Monday increase, Brent crude is closer than ever to the $60 per barrel price OPEC members are said to target.