Oil prices have hit a 9-month high during June as a result to Iraq’s oil supply following the advance of rebels in Iraq. In June, the price of Bent crude and west Texas Intermediate reached $115/bbl and $107/bbl respectively; while the price of Kuwait export crude reached $108.9/bbl. Oil prices haven’t reached these levels since last September. After the fall of Mosul and Tikrit under the control of the rebels, concerns regarding the rebels seizing control over oil fields and oil export infrastructure near Kirkuk where the federal government controls the majority of oil production in the north.
Insurgents have targeted Baji complex Iraq’s largest refinery located north of Baghdad. However, since rebels failed in taking over Baghdad or securing a foothold in oil rich Kirkuk, oil prices began to decrease. In fact, international market fears regarding Iraqi oil supply are mainly about future output and the impact of continued violence would have on Iraq’s capacity to maintain future oil targets in the context of increasing global oil demand rather than the current oil production.
The International Energy Agency IEA has forecasted the world oil demand to increase by 1.3 million barrels a day and to reach 92.8 million barrels a day in 2014.