Brent drops below $114

A ship is connected to the Basra Oil Ter24 June 2014, News Wires – Brent crude slipped below $114 per barrel on Tuesday, as data showing near-record high oil exports from Iraq indicated supplies remained unaffected by the escalating violence at the Opec’s number two producer.

Exports from Iraq’s southern terminals averaged 2.53 million barrels per day up to 21 June, according to shipping data and Reuters sources, even as Sunni Islamist insurgents captured swathes of territory in northwest and central Iraq.

This compared with May’s average of 2.58 million bpd – the highest since 2003.

“The oil markets look going softer unless the Sunnis start blowing up refineries or ports which they won’t do because it cuts off income,” Reuters quoted Barratt Bulletin chief executive Jonathan Barratt as saying on Tuesday.

Brent crude dropped 27 cents to $113.85 by early Tuesday morning, off a nine-month top of $115.71 reached last Thursday. The benchmark closed 0.6% down on Monday – its biggest drop since 16 May 16 – as Iraq supply worries eased.

US crude fell 49 cents to $105.68 per barrel, after falling 1% in the previous session, its biggest slide since late May.

Direct US intervention in the Iraq crisis, with air strikes or other military action, could lead to a spike in oil prices, but Barratt said he does not expect the US to take such tough action given Secretary of State John Kerry’s comments on Monday.

Kerry promised “intense and sustained” US support for Iraq, but said the divided country would only survive if its leaders took urgent steps to bring it together.

President Barack Obama has offered up to 300 American advisers to Iraq but stopped short of granting Baghdad’s request for air strikes to counter the advance by Sunni militants.

“I think oil prices should go lower unless the US can be seen as an aggravator,” Barratt added.

US oil prices, however, could draw support from forecasts for a drop in crude inventories last week.

A Reuters survey forecast US crude stocks fell 1.3 million barrels on average last week, while product stockpiles rose.

Industry group the American Petroleum Institute will release its weekly data later in the day followed by the US Department of Energy’s Energy Information Administration on Wednesday.

Investors are also keeping an eye on other geopolitical events, such as the impact on oil and energy prices from a potential peace deal between Ukraine and pro-Russian separatists.

Leaders in two main rebel areas of Ukraine’s east will observe a ceasefire with Ukrainian forces until 27 June in a move that will run parallel with a truce by Ukrainian forces as Russia is urged by the European Union to back the peace pact.

Crude exports from Libya’s Hariga port have again been blocked by protesting guards demanding unpaid wages, a spokesman for operator Arabian Gulf Oil Co said on Monday.

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