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Tensions add to surge

Oil prices at two year high as demand increases

Brent Oil fieldOil prices have risen to their highest for more than two years on the back rising demand and international tensions.

There have also been indications that production cuts by Opec members are starting to kick in.

Brent rose 3.8% to $59.02 a barrel, its highest since July 2015, while the US West Texas benchmark rose 3% to $52.22.

It us up more than 30% since June as global stockpiles have tightened, with demand in industrialised countries expanding alongside emerging markets for the first time in almost a decade.

BP’s top oil trader in Asia said the crude market had turned a corner after a three-year slump and one analyst said: “The production cut is starting to work and the rebalance is under way.”

Increased demand from China and a threat from Turkey to disrupt oil flows from Iraq’s Kurdistan region helped push up prices.

Turkey has said it could cut off a pipeline that carries oil from northern Iraq to the global market, putting more pressure on the Kurdish autonomous region over its independence referendum.

the damage to US shale output in the wake of Tropical Storm Harvey could also lift Brent.

Opec and a number of other producers have cut production by about 1.8 million barrels per day (bpd) since the start of 2017, helping lift oil prices by about 15% in the past three months.

The rising price will add to industry’s costs but will also help the recovery of activity in the North Sea.

 

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