Oil advanced for a third session as a pause in some exports from Iraqi Kurdistan fueled fears of a tightening supply and, as fears of a global banking crisis faded, supported challenges in broader markets.
The Iraqi government in Baghdad has halted the export of 450,000 barrels of oil per day from the semi-independent Kurdistan region in the North in response to an arbitration decision that validated its stance on oil shipment.
Hence, Brent crude was up 72 cents, or 0.92%, at $79.38 a barrel. Meanwhile, US West Texas Intermediate crude was up 77 cents, or 1.12%, at $73.98. Norwegian oil firm DNO has announced that it has started to halt production at fields in Kurdistan. The company’s Tawke and Peshkabir fields averaged 107,000 bpd in 2022, accounting for a quarter of total current Kurdish exports.
Easing fears about the banking sector after a week of market volatility that sent oil to a 15-month low eased investor fears of asset sales at embattled Silicon Valley Bank, thereby helping the sentiment.
Oil gains support from falling US inventories
Oil also gained support from falling US crude inventories. Crude oil fell by 6.12 million barrels, according to American Petroleum Institute statistics, based on market sources.
According to the advocacy group, an oil tanker owned by a US merchant shipping company carries Iranian crude through a key Asian strait violating US sanctions. The company allegedly involved, Euronav, said it would take appropriate action if necessary.
Fears emerged after Iran could trade its crude oil at sea despite the return of US sanctions. At the same time, it continues to sell oil and supply Russia with bomb-carrying planes to support Moscow’s war on Ukraine.
This is not the first time a US-linked firm has been involved in Iranian oil shipments at sea.
The US government has announced that illicit revenues from Iranian oil fund the paramilitary Revolutionary Guard’s Quds Force, an expeditionary unit believed to be operating overseas in countries such as Iraq, Lebanon, Syria and Yemen to support Iran-allied militias.