Oil prices are on the rise as supply from Northern Iraq in the Kurdish territory have been reduced as tensions rise. We are also getting new threats from North Korea as UN envoy, Deputy ambassador Kim In-ryong tells general assembly that tensions with the U.S. “has reached the touch-and-go point and a nuclear war may break out any moment”. This comes as global demand expectations are rising.
China growth is expected to rise to 7% and their oil imports should continue to stay near record highs as they start to get addicted to U.S. crude oil supply.
Iraq and Turkey have been taking a hard line since an independence referendum that was held on Sept. 25, in which almost 93 percent of Iraqi Kurds for independence.The vote, of course, riled not only Iraq but Turkey that has a huge Kurdish population and have worked actively to thwart their language and independence. The referendum did not have the backing of the Iraqi government, the international community or the United States. Yet President Donald Trump said that “We’re not taking sides, but we don’t like the fact that they’re clashing. We’ve had for many years a very good relationship with the Kurds.” Iran, though trying to gain influence, is taking sides by halting trade with the Kurdistan Region on Sunday morning after Iran closed the three official border crossings, according to Kurdish officials.
So far, fighting has reportedly reduced output by 275,000 barrels of their normal capacity of 620,000 barrels. The market expects that the fighting will not do any damage to the longer-term production prospects in the region because both sides have a vested interest in keeping the oil flowing when this is all over.
China ahead of their Communist Party Congress is talking up China growth and that means that we could see more Chinese demand for US oil. Reports that the People’s Bank of China governor, Zhou Xiaochuan, as saying china growth will hit 7 percent in the second half of the year. First-half GDP growth was 6.9 percent and third-quarter GDP numbers will be released on Thursday. That comes as China ramps up U.S. crude imports that is helping drain U.S. oil supply. China’s crude oil imports surged to the second-highest on record in September, up from August’s 8 million bpd. China’s oil imports are up 12.2 percent in the first nine months of 2017 from the same period last year according to Reuters.
