Oil prices drop on fading fears that conflicts in crude producers Libya and Iraq would result in major supply disruption.
LONDON – World oil prices dropped on Thursday on fading fears that conflicts in crude producers Libya and Iraq would result in a major supply disruption, analysts said.
Brent North Sea crude for delivery in October shed 84 cents to stand at $101.44 a barrel in London afternoon deals.
US benchmark West Texas Intermediate for October dropped 64 cents to $92.81 a barrel compared with Wednesday’s close.
“Supply fears stemming from conflicts in both Iraq and Ukraine have recently diminished,” said Dorian Lucas, an analyst at energy consultancy Inenco.
“Supply fears have also been quelled by an increased export volume from Libya. Exports have resumed from Libya’s largest port following the end of the year-long blockade.”
Traders are closely tracking conflicts in crude producers Libya and Iraq, as well as in Ukraine, a key conduit for Russian gas exports to Europe, analysts said.
“Benchmark prices weakened further as there has been no disruptions in crude supply despite ongoing crises in Iraq and Libya,” said Sanjeev Gupta, analyst at consultants EY.
Global oil prices had rebounded on Wednesday from the previous day’s multi-month lows, as dealers digested signs of strengthening crude demand in top consumer the United States.
The US Department of Energy revealed that American crude oil stockpiles slumped 4.5 million barrels in the week ending August 15.
That was far heavier than expectations for a drop of 900,000 barrels, according to analysts.
In Iraq, the OPEC cartel’s number-two producer, US air strikes that began on August 8 have pinned back the Islamic State group who have overrun large swathes of the country’s north and west as well as parts of Syria.
US President Barack Obama on Wednesday demanded the world take firm action against the “cancer” of jihadist extremism in Iraq and Syria, a day after the militants released a video showing the beheading of US reporter James Foley.
The jihadist expansion has not affected oil production in Iraq’s south, where most of its oil infrastructure is situated. Supply to neighbouring Turkey and Jordan has however been disrupted.
In Libya, output has been increasing in the vital oil sector despite ongoing fighting between Islamist militia and government forces.
Mohamed Hrari, spokesman for Libya’s National Oil Corporation, said production on Monday reached 550,000 barrels a day, from around 400,000 barrels previously.
Output in the north African state, an OPEC member, had been severely limited for a year after rebels last summer blockaded terminals as part of a campaign to restore autonomy in the country’s eastern region.
The terminals were reopened after Tripoli struck a deal with the rebels in April.