The price of oil continues to creep up, with Brent crude now just short of 115 dollars a barrel over fears of fighting in Iraq, one of OPEC’s biggest producers.
The price is now at a nine-month high, and faces a testing period of market pressure over events in the Middle East, which have the potential to seriously disrupt supply.
This month saw the price jump after the Iraqi cities of Mosul and Tikrit fell to Sunni extremist forces, and it looked like they might push onto Baghdad.
“Iraq is one of the world’s most important oil exporters and producers. It is now number two within OPEC behind Iran. Even a small reduction of Iraq’s output will have a huge impact on the oil price and some analysts targetting $125, even $150 dollars a barrel,” says the head of Commerzbank’s Commodities Research Eugen Weinberg.
Fighting is now underway in and around Iraq’s largest refinery in Baiji, and beyond the battlefield more mundane forces are driving the price spike, like the Federal Reserve’s positive assesment of the US economy on Wednesday.
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