Brent oil steady around $114 as Iraq exports in focus

Brent crude oil held steady near 114 dollars a barrel on Thursday, with traders watching developments in Iraq for the possibility of export disruption from OPEC’s second-largest producer.

Oil hit a nine-month high a week ago on fears that conflict in Iraq could split the country and hit oil exports.

But it has since retreated slightly as production has been largely unaffected by the fighting.

Iraq’s southern oilfields, which produce the majority of the nation’s 3.3 million barrels a day, remained safe, said Nickolay Mladenov, UN special envoy to Iraq.

Insurgents and Iraq government forces continued to fight on Wednesday for control of the country’s largest refinery, the 300,000-barrels-per-day Baiji complex, with troops being airlifted into the site by helicopter.

“It’s not far from the year’s high.

Oil price will rise up again if there are further incursions into Iraq towards Baghdad or the southern oilfields,” Michael Hewson, analyst at CMC Markets, said.

Brent crude had slipped 15 cents to 113.85 dollars a barrel, having fallen in the past four sessions after hitting its highest since September at 115.71 dollars last Thursday.

Militants attacked one of Iraq’s largest air bases and seized control of several small oilfields on Wednesday.

Meanwhile, U.S. special forces troops and intelligence analysts arrived to help Iraqi security forces counter the mounting Sunni insurgency.

However, there were hopes that oil exports could increase from Kurdistan, which would counter any potential slowdown of shipments from the south.

Iraq’s self-ruling Kurds outlined plans on Wednesday to ramp up oil exports now that their forces have seized control of Iraq’s main northern oilfields.

U.S. crude fell four cents to 106.46 dollars a barrel.

It had gained 47 cents in the previous session on news Washington allows exports of condensate, an ultra-light oil, in marginal relaxation of a 40-year ban on U.S. oil exports.

Enterprise Products Partners, one of two companies given Department of Commerce approval on Tuesday to export condensate, said it could start exporting any time.

Also putting pressure on prices, U.S. crude inventories unexpectedly rose by 1.74 million barrels last week to 388 million barrels, data from the U.S. government’s Energy Information Administration showed.

Hewson at CMC Markets added that disappointing economic data from the United States in the previous session was helping to cap oil prices.

Global growth remains weak so there are no demand factors pulling us higher,” he said.

Investors are also keeping an eye on the threat of further sanctions on Russia by Western powers.

The sanctions will prevail if Moscow does not do more to defuse the conflict between pro-Russian separatists and Kiev in eastern Ukraine.

Meanwhile, two weeks of talks between Iran and six world powers to reach a final agreement over Tehran’s nuclear programme will start in Vienna on July 2, Russia’s ambassador to the U.N. said.

Reuters