08 August 2014 – Oil prices on both sides of the Atlantic rose more than $1 on Friday, with Brent nearing $107 a barrel after the US approved air strikes against Islamic militants in Iraq, raising the threat of oil disruptions from the key oil producer.
President Barack Obama said he had authorised limited use of American air power on advancing Islamic militants in northern Iraq to protect American personnel, but had no intention of getting dragged into war there.
“Gains may extend further when London opens, but after a round of short covering, I think we will see some profit taking in the market,” said Ken Hasegawa, a commodity sales manager at Newedge Japan.
“The market is very thin, so such sudden news can result in significant price moves, not only in oil but also in stock and currency markets,” said Hasegawa.
Brent crude for September delivery rose $1.19 cents to $106.63 a barrel early on Friday, after trading as high as $106.85 a barrel earlier in the session. The contract was on track for gains of nearly 2% for the week.
US crude rose 90 cents to $98.24 a barrel, after trading as high as $98.45 a barrel.
The spread between the two benchmarks widened to $8.39 a barrel.
Islamist militants surged across northern Iraq toward the capital of the Kurdish region on Thursday, sending tens of thousands of Christians fleeing for their lives.
The air strikes would be the first carried out by the US military in Iraq since the withdrawal of its forces at the end of 2011, but Obama insisted he would not commit any ground forces and had no intention of letting the US get dragged back into a war there.
Brent spiked above $115 in mid-June on fears that violence in Iraq would disrupt oil supplies from the Opec member.
But prices fell back more than $10 over the past six weeks as it became clear that Iraqi oil continued to flow steadily from southern fields, and as investors shifted attention to what appeared to be an oversupplied global oil market.