Oil prices rose by 2% early on Monday, with the U.S. benchmark up above $70 a barrel again, driven up by a halt to Kurdistan’s 400,000-bpd of crude exports and signs of easing concerns about the global banking sector.
As of 10:17 a.m. EDT on Monday, WTI Crude, the U.S. benchmark, traded at $70.76, up by 2.31% on the day. The international benchmark, Brent Crude, was up by 2.04 % at $76.41.
Oil was rising at the start of the week after Kurdistan’s crude oil exports – around 400,000 bpd shipped through an Iraqi-Turkey pipeline to the Turkish port of Ceyhan and then on tankers to the international markets – were halted late last week by the federal government of Iraq. As of Monday, there were no signs of resumption of the exports from the semi-autonomous Iraqi region.
Last week, the International Chamber of Commerce ruled in favor of Iraq against Turkey in a dispute over crude flows from Kurdistan. Iraq had argued that Turkey shouldn’t allow Kurdish oil exports via the Iraq-Turkey pipeline and the Turkish port of Ceyhan without approval from the federal government of Iraq.
After the ruling on Thursday, Turkey told Iraq it would respect the ruling, while Baghdad halted the exports from Kurdistan. Norway’s DNO ASA, which operates in Kurdistan, confirmed the halt of the exports, saying that it had been instructed by the Kurdistan Regional Government to temporarily cease oil deliveries to the Iraq-Turkey pipeline for export.
Apart from the supply scare from Kurdistan, oil prices were also supported early on Monday by signs of easing concerns about the banking system in the United States.
On Sunday, the Federal Deposit Insurance Corporation (FDIC) said that First Citizens BancShares would buy the failed Silicon Valley Bank, assuming all deposits and loans of SVB from the FDIC.
U.S. regulators are also weighing expanding an emergency lending facility for banks, sources familiar with the matter told Bloomberg this weekend.