Iraq violence sends oil prices surging towards $115

GMT 14:18 2014 Friday ,13 June

Arab Today, arab today Iraq violence sends oil prices surging towards $115

Iraqi men who volunteered to join the fight against a major offensive
London - AFP

Oil hit a nine-month peak this week as unrest erupted in key OPEC crude producer Iraq, while haven investment gold struck a multi-week high as many investors sought safety.
The Iraqi government bolstered Baghdad's defences on Friday as jihadists pushed towards the capital and US President Barack Obama said he is examining options short of sending ground troops to help Baghdad counter the Sunni extremist offensive.
Predominantly Shiite Muslim Iran will combat the "violence and terrorism" of Sunni extremists who have launched an anti-government offensive in neighbouring Iraq, President Hassan Rouhani warned.
However, it was not clear what steps Tehran would take to thwart a bid by fighters from the Islamic State of Iraq and the Levant (ISIL), who are pushing toward Baghdad after seizing several cities and towns to the north.
OIL: Brent prices leapt to $114.69, touching the highest level since September 2013, as traders eyed worsening violence in key OPEC crude exporter Iraq.
"Prices are still being driven up by the events in Iraq, where militants from the Sunni terrorist group ISIL have seized further territory and are now said to be just a few kilometres away from the capital, Baghdad," said Commerzbank analyst Carsten Fritsch.
"The US is now considering air strikes by way of supporting the Iraqi armed forces in their fight against the ISIL. The Iraqi government increasingly appears to be losing control of the country."
The International Energy Agency cautioned that oil supplies from Iraq may not be at immediate risk.
Iraq is the second biggest oil exporter in the 12-nation Organization of Petroleum Exporting Countries (OPEC) after kingpin Saudi Arabia.
"Concerning as the latest events in Iraq may be, they might not for now, if the conflict does not spread further, put additional Iraqi oil supplies immediately at risk," the Paris-based IEA said in its monthly report.
It pointed out that Iraq's relatively small output from the north of the country has been off the market since March due to violence, while output from the south has been on the rise and production has hit a 30-year high.
The 12-nation OPEC oil cartel, which pumps one third of the world's crude, decided on Wednesday in Vienna to hold their collective production target at 30 million barrels per day (bpd), where it has stood since late 2011, as they said the oil market was stable.
OPEC nations have expressed their satisfaction with prices above $100 a barrel -- where they have been for most of this year -- as it brings them in sufficient revenue while appearing not to crimp growth in consuming nations.
By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in July leapt to $113.29 a barrel from $108.77 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for July soared to $106.64 a barrel compared with $102.73 a week earlier.
- Gold rallies on Iraq -
PRECIOUS METALS:  Gold hit a two-and-a-half week peak at $1,277.65 per ounce, as investors sought a safe-haven investment to shelter from Iraq woes.
"Demand for safe haven assets made a comeback after events in Iraq," said Capital Spreads analyst Jonathan Sudaria. Gold is traditionally viewed as a safe store of value in times of geopolitical uncertainty and unrest.
On the downside, palladium and platinum sank on news of a breakthrough deal to end strikes in key producer South Africa.
"Platinum and palladium ... were still falling after unions agreed on a wage deal for miners in South Africa," said CMC Markets analyst Jasper Lawler.
Ahead of the deal, however, palladium had surged on Wednesday to $864.20 per ounce, the highest point since February 2001, on fears over the impact of the industrial action.
South Africa's radical AMCU union said Friday it had agreed in principle to a deal to end the country's longest mining strike, which has crippled the world's largest platinum producers.
"In principle we have agreed to the offer," Joseph Mathunjwa, the leader of the Association of Mineworkers and Construction Union, told the SAPA news agency.
"There are still issues that we need to consult with the employer," the agency quoted him as saying.
Mathunjwa's comments came a day after South Africa's three main platinum producers -- Anglo American Platinum, Impala Platinum and Lonmin -- said that they had struck a deal in principle that union leaders would take to members for final approval.
South Africa, which supplies nearly a third of the world's palladium, has been hit by long-running strikes at its mines.
By Friday on the London Bullion Market, the price of gold gained to $1,273 an ounce from $1,247.50 a week earlier.
Silver increased to $19.58 an ounce from $19.03.
On the London Platinum and Palladium Market, platinum dropped to $1,437 an ounce from $1,453.
Palladium fell to $816 an ounce from $840.
BASE METALS: Base or industrial metals mostly fell, hit by Iraq worries as traders sought less risky bets.
"The entire base metal sector found itself under considerable pressure, the growing risk aversion as a result of the situation in Iraq also playing its part in this," said Commerzbank analysts.
Some metals won some support from upbeat data in key consumer China.
The Asian powerhouse's industrial output growth accelerated to 8.8 percent year-on-year in May, official data showed Friday, while retail sales hit their highest level since December in signs of renewed strength in the world's second-largest economy.
The industrial production figure was stronger than the 8.7 percent recorded a month earlier.
By Friday on the London Metal Exchange, copper for delivery in three months fell to $6,649.75 a tonne from $6,674 a week earlier.
Three-month aluminium decreased to $1,841.50 tonne from $1,851.
Three-month lead firmed to $2,080 a tonne from $2,075.
Three-month tin slid to $22,600 a tonne from $23,020.
Three-month nickel sank to $18,087 a tonne from $18,624.
Three-month zinc rose to $2,083 a tonne from $2,075.50.
- Cocoa shoots higher again -
COCOA: Prices hit three-year pinnacles as traders eyed weather-related supply worries.
"The fears of production shortfalls associated with El Nino are partly responsible for a further cocoa market deficit being predicted in the 2014/15 season, which has recently pushed cocoa prices to multi-year highs," said Commerzbank analysts.
The El Nino phenomenon, an abnormal warming of surface ocean waters in the eastern Pacific, occurs every two to seven years and causes droughts in some areas and flooding in others.
Cocoa hit $3,119 a tonne in New York, a level last seen in mid-2011, and hit a similar peak at £1,964 in London before encountering profit-taking.  
By Friday on LIFFE, London's futures exchange, cocoa for delivery in September fell to £1,924 a tonne from £1,959 for the July contract a week earlier.
On the ICE Futures US exchange, cocoa for September dipped to $3,069 a tonne from $3,097 for the July contract a week earlier.
COFFEE: The coffee market also rebounded as traders fretted over supply shortfalls in key producer Brazil.
"Concerns about crop outages have come to the fore again, causing the price of Arabica coffee to climb," noted Commerzbank analysts.
On ICE Futures US, Arabica for delivery in September rose to 178 US cents a pound from 170.10 cents for the July contract a week earlier.
On LIFFE, Robusta for September increased to $1,988 a tonne from $1,899 for the July contract a week earlier.
SUGAR: The market enjoyed mixed fortunes.
By Friday on LIFFE, the price of a tonne of white sugar for delivery in August slid to $457.70 from $460.50 a week earlier.
On ICE Futures US, the price of unrefined sugar for October rose to 17.60 US cents a pound from 16.90 US cents for the July contract a week earlier.
RUBBER: Prices in Kuala Lumpur experienced a modest rebound amid encouraging economic data in main consumer China.
The Malaysian Rubber Board's benchmark SMR20 rose to 168.55 US cents a kilo from 166.60 cents a week earlier.

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