Oil jumps on fears of new Iran sanctions, Iraq conflict

crude oil

Oil markets jumped on Monday over fears of potential renewed U.S. sanctions against Iran as well as conflict in Iraq.

An explosion at a U.S. oil rig and reduced exploration activity also supported prices there.

Brent crude futures, the international benchmark for oil prices, were at 57.85 dollars.

There were also concerns about the stability of Iraq, the second biggest oil producer within OPEC behind Saudi Arabia.

Iraqi forces on Sunday began moving towards oil fields and an important air base held by Kurdish forces near the oil-rich city of Kirkuk, Iraqi and Kurdish officials said.

On Monday, Iraq’s Kurdistan briefly shut down some 350,000 barrels per day (bpd) of production from major fields Bai Hassan and Avana due to security concerns.

An explosion overnight at an oil rig in Louisiana’s Lake Pontchartrain drew market attention, with at least six people injured.

U.S. crude prices were also supported by drillers cutting back the number of rigs looking for new production.

U.S. West Texas Intermediate (WTI) crude futures were trading at 51.89 dollars per barrel, up 44 cents, or 0.9 per cent.

Drillers cut five oil rigs in the week to Oct. 13, bringing the total count up to 743, the lowest since early June, General Electric Co’s Baker Hughes energy services firm said late on Friday.

Oil consumption has also been strong, especially in China, where the central bank governor said on Monday the economy is expected to grow by 7 percent in the second half of this year, defying widespread expectations for a slowdown. 

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