Oil Prices Jump On Iraq Concerns

June 17th, 2014 by James

Crude oil prices hit a high of nine months on Thursday over supply concerns and equities sold off as violence threatened to result in instability in Iraq.

Iraqi Kurdish forces took control of the northern oil hub of Kirkuk after Sunni Islamist rebel march towards Baghdad to threaten the future of Iraq as a unified state. U.S. President Barack Obama did not rule out U.S. action against the militants. “If this conflict knocked out Iraq as an exporter, that would have significant impact on prices,” said Christopher Bellew, a trader at Jefferies Bache.

Oil Prices Jump On Iraq Concerns

The Thomson Reuters/Jefferies CRB index .TRJCRB rose 1.1 percent, the most in two months. Brent crude futures LCOc1 rose 3 percent to $113.27 a barrel while U.S. crude CLc1 added 2.2 percent to $106.71, the highest reading for both since September.

“It’s a bit of a crisis mode here,” said Timothy Ghriskey, chief investment officer at Solaris Asset Management LLC in New York. “Geopolitical concerns have definitely taken over. It’s a very fluid situation and things are happening very fast, it seems.”

The Dow Jones industrial average .DJI fell 109.69 points or 0.65 percent, to 16,734.19, the S&P 500 .SPX lost 13.78 points or 0.71 percent, to 1,930.11 and the Nasdaq Composite .IXIC dropped 34.30 points or 0.79 percent, to 4,297.63. The violence in Iraq drove investors into U.S. Treasuries. U.S. 10-year notes were up 15/32 in price to yield 2.5861 percent, from 2.641 percent late on Wednesday. The 30-year bond rose 1-4/32 to yield 3.4084 percent.

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