Brent crude futures were back above $US113 Sunday evening as trading opened to more bad news out of Iraq.
The London-traded contracts were up as much as $US0.94 as the U.S. ordered Iraq embassy workers out of the country as Sunni insurgents continued their march toward Baghdad. There were also unconfirmed reports the ISIL militia had taken control of a refinery 145 miles northwest of Baghdad.
In a note this weekend, Citi’s Ed Morse said the deteriorating situation has profound implications for oil markets, which had been counting on Iraq’s surge in production over the last few years to continue:
The longer the insurgency lasts and the more divisive it becomes, the more difficult it will be for Iraq to even approach its potential to sustain production at 6-m b/d or more, with radical implications for oil markets at a time of growing lost production worldwide due to intensifying disorder in a growing number of petroleum-producing countries.
Here’s the chart. It looks like we’re settling in around $US113.10: