MARKET NEWS
Oil prices surge after EU's new Russia sanctions and drone attacks in Iraqi Kurdistan - REUTERS
Oil (BZ=F, CL=F)
Oil prices jumped on Friday morning after the European Union (EU) agreed new sanctions against Russia, while drone attacks on northern Iraqi oil fields prompted concerns about tighter supply.
Brent crude (BZ=F) futures rose 0.8% to trade at $70.06 per barrel, at the time of writing, while West Texas Intermediate futures (CL=F) rose 0.4% to $67.84 a barrel.
The EU approved an 18th sanctions package against Russia on Friday over its war in Ukraine. The measures included lowering the price cap on Russian oil, along with restrictions on its petroleum refined in third countries, according to a Bloomberg report.
Oil prices were also driven higher after four days of drone attacks on oil fields in Iraqi Kurdistan shut down facilities in the region.
Reuters reported that officials had pointed to Iran-backed militias as the likely source of the attacks, though no group has claimed responsibility.
ING head of commodities strategy Warren Patterson and commodities strategist Ewa Manthey said: "Near-term oil fundamentals remain supportive, with the market set to remain fairly tight through this quarter, before becoming better supplied from the last three months of the year.
"In addition, drone attacks on oil fields in Kurdistan provided some further support, with producers suspending operations, resulting in around 200k b/d [barrels per day] of lost production."
"However, a deal between the government in Baghdad and the Kurdistan regional government should resume oil exports from Kurdistan, after being halted since early 2023," they added. "The Kurdish region will supply Iraq’s State Organization for Marketing of Oil (SOMO) with at least 230k b/d."
