Government forces in the oil-rich Middle Eastern nation were fighting militants north of Baghdad and military forces seized control over the nation's largest oil refinery, Baiji, which has been a focal point of the power struggle. The matter is on the radar of President Obama, who informed high-level political peers that he is not in need of Congressional approval for the various responses he is pondering.
Decreasing inventories prompted West Texas Intermediate crude oil futures to increase in value for the first time in four days.
"The short-term risks have increased significantly, and a test of $120 for Brent next week wouldn't come as a surprise," energy economist Hans van Cleef with ABN Amro Bank NV in Amsterdam told the news source on Thursday. "All the tensions are in the north of Iraq, and as long as exports keep flowing from the south the impact will remain muted."
U.S. inventories slip
The U.S. Energy Information Administration said on Wednesday that supplies of U.S. crude oil dropped by 579,000 barrels to 386.3 million barrels for the period ending June 13.
The inventory reduction comes after supplies touched 399.4 million barrels in the end of this past April, which marks the highest level since the accounting arm of the U.S. Energy Department began publicizing inventory data in the early 1980s.
One industry insider pointed to the conflict in Iraq as being a key factor regarding the price of oil and supplies.
"The crude market is telling us the importance of Iraq," chief investment officer Jonathan Barratt with Ayers Alliance Securities in Sydney told the news outlet on Thursday. "The concerns are smoldering and that keeps oil up. The EIA numbers are in line with what you'd expect this time of year."
Iraq's biggest refinery in dispute
Located about 130 miles north of Baghdad, the Baiji facility was overrun by Sunni militants on Wednesday, The New York Times reports.
The oil refinery is of key importance because of the proceeds from the sale of the fuel. Since last week, the militants had surrounded the facility and they engaged with the Iraqi army that was supported by air forces.
However, Iraqi General Qassim Atta said that the refinery never was in the power of the militants but, rather, it was "completely" controlled by Iraqi security forces.
Militants had penetrated the Baiji facility and they were controlling two of four primary entrances, according to a municipal official. Fighting was continuing between the rivaling sides.
Canada nods to export plan
Canada, whose top export is the energy commodity, granted approval earlier this week for a pipeline to transport crude oil to the Pacific Coast for the purposes of shipping it to Asia, according to The Associated Press.
The Enbridge Northern Gateway project focuses on the northern region of the province of Alberta, which holds the globe's third-biggest reserves of oil. The tally amounts to roughly 170 billion.
The project's drive to diversify its supplies comes as the nation is looking beyond the U.S., which is the world's largest consumer of oil and the recipient of 97 percent of Canadian oil.
One of the biggest prospective clients for oil shipped from Western Canada is China, also the world's second-biggest consumer of the energy commodity. During the past several years, the Asian nation has invested at least $40 billion in energy projects particular to Canada.
"They are watching this very, very closely," special adviser Wenran Jiang,to Alberta's Department of Energy told The Associated Press on Tuesday, noting the Chinese are patiently awaiting receipt of Canadian oil.
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