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The oil price soars as OPEC's second biggest producer is under attack

by , 13 June 2014

Over the last few days, Iraq is under siege. Insurgents have stormed the country taking over at least nine towns and cities so far. The news has led the oil price strongly higher. And led the US markets down yesterday. Let's take a closer look at what's going on with the oil price…

Crude oil hits a nine month high

The events in Iraq saw “Brent crude oil hit a nine-month high near $115 a barrel” earlier today, reports BDLive. There are concerns over the exports of oil from the country. And the US says it’s considering “military action against the Islamist militants”.

Out of the Organisation of the Petroleum Exporting Countries (OPEC), “Iran is the second-largest oil producer,” notes the BBC. A trader at Jefferies Bache, Christopher Bellew says that if the “conflict knocked out Iraq as an exporter that would have significant impact on prices”.

As the Iraq crisis grew, US stocks fell

Yesterday, as the crisis escalated in Iraq, US stocks fell, notes Fin24. Economist Peter Cadillo of Rockwell Global Capital said the drop in share prices was all down to what’s going on in Iraq. A “sustained rise in oil prices” isn’t good for the US economy. It would negate “economic activity and consumer spending”.

Energy companies rose on the news, adds Fin24. But oil-sensitive stocks, such as airlines, fell.

Brent crude oil added more than $3 yesterday, adds BDLive. Today it “hit a session peak of $114.69 a barrel”. Futures contracts also rose $1 to $114.02 by first thing this morning.

At the time of writing, Brent crude was trading at $112.86.

If the crisis continues to worsen in Iraq, the oil price will likely remain under pressure.

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The oil price soars as OPEC's second biggest producer is under attack
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