Oil broke higher to open the week with a gap. During the weekend the governmental forces of Iraq entered the city of Kiruk and took under control minefields in the region. The disputed city of Kirkuk has always been a ‘bingo’ for the Kurdish region. They regarded it as an integral part of Kurdistan. But Bagdad regards it with similar intensity. Kirkuk has always had the unresolved status. The current conflict may not only move the oil prices but also deep the turmoil in this region.
Iraq supplies about 14% of total OPEC production. A conflict in the north of the country had an immediate impact on oil markets. The fear of disruptions in supply sent brent crude 1.7% higher to September, 28 highs at $57.90 for a barrel in the morning. The commodity is unstoppable and is nearing September, 22 highs at $58.40.
Another positive factor for oil is US unilateral potential sanctions against Iran. Given the current bullish trend there are good chances the benchmark will break the $60 round figure till the end of the year.