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Brent oil hovered just above a 9 month low today with effects of the airstrikes in Iraq called by the US still being assessed by investors.
Futures for the European crude oil with a delivery date in September were mostly unchanged today, but gained as much as 0.3% for a price per barrel of $104.68. It was trading at $105.13 on the London-based ICE Futures Europe exchange late morning in Seoul. The benchmark closed on its lowest level since November 2013 last August 6th at a price per barrel of $104.59. Brent prices have so far declined this year by 5.1%.
The downward pressure on oil prices could be credited to the US military’s action last week to prevent thousands of minorities and American personnel from being attacked and massacred by militants of the Islamic State. The intervention is believed to will protect oil supplies in Iraq, the second largest producer in the Organization of Petroleum Exporting Countries who produced 3 million barrels daily during the month of Juy.
US President Barrack Obama has advised the Iraqi government to form a more inclusive government without the divisive presence of current prime minister Nouri al-Maliki in order to better combat the Islamist militants in the long term. According to the US Central Command in Tampa, Florida, yesterday’s airstrikes targeted mortar positions and armed trucks owned by ISIS.
Analyst Hong Song Ku from Samsung Futures Inc. says that, “There’s speculation that U.S. airstrikes can keep the Islamic militants under control.” Hong added that, in the past, geopolitical tensions have given temporary support to oil prices which stabilize after a month.
Futures with a delivery date in September of West Texas Intermediate, the American benchmark, climbed to a price per barrel of $98.03 after addin on 38 cents. Trading volume was 36% greater than the 100 day average. It held a discount under brent of $7.13, narrower than last week’s close of $7.37.
