Oil Prices Poised for Jump: Global Risk Management

by Ship & Bunker News Team
Friday July 4, 2014

After a period of remaining in a limited range, oil prices could be poised to jump as instability in Iraq and Ukraine threaten to disrupt supply, Global Risk Management reports.

"Not securing your oil price solely based on present or potential future price, but rather based on your exposure and budgets will help you avoid any unpleasant surprises when oil prices make their big moves," the company said.

In recent years, the supply of oil from Iraq has rebounded to a current level of 3.3 million barrels per day (mbpd), close to a 40-year high, but the fighting now occurring in the country seems likely to bring it back down.

"If the rebels against PM al-Maliki in Bagdad reach the southern part and successfully disrupt production, oil prices are likely to slingshot upwards $10-15 per barrel," the firm said.

Disruption in Ukraine, with its key position between Russia and Europe, could also be an issue.

On the demand side, economic growth in the U.S. and stimulus measures by the European Central Bank could also push prices up.

Iraq's Oil Minister recently said that crude exports from Iraq are expected to rise in July, signally that the government is still in control.