The price for oil has pushed higher mainly on the back of the Iraqi crisis. On Friday the WTI oil price reached $107.68, which represents a new 52-week high, and later retracted back to $106.56. Overall, over the past year, the oil price went up by over 15%. Today on CNBC, Matt Smith, a commodity analyst of Schneider Electric discussed about the prospects of the oil price and the concerns about exports of oil from Iraq.
Smith said that currently the production of oil in the Northern Iraq has been halted. However, the biggest concern for the crude oil is if the insurgency will move to the South, where all the production is coming from at the moment. At the same time, the oil is currently exported through the Persian Gulf, which is also located in the southern part of the country.
Smith was also asked about what would happen in the scenario when things will turn positive, which means that the insurgency gets shut down and whether this would help to drive the oil prices lower. The analyst considers that this would be the best case scenario and in this development the prices would start declining.
Moreover, Smith stated that it is currently hard to discount these tensions and see what the oil prices could be without them.
“We could see WTI move below 100. But that would mean we’d had to see Libian production come back online, Nigerian production increasing, etc. It’s just not really a likely scenario that I see in the near term.”
Watch full video below:
The crisis in Iraq was caused by an al-Qaeda splinter group taking control of the city of Mosul in the northern part of the country. However, the Iraqi Oil Minister, Abdul Kareem Luaibi assured that the oil exports will not be affected by the insurgency and added that the country plans to increase its production by 4 million barrels per day by the end of the current year.
Earlier this week, the Department of Energy announced that the oil inventories have dropped by 2.6 million barrels, which represents a much higher decline in comparison with the expected 1.2 million barrels.