London – As a number of geopolitical problems unfold, oil prices maintained gains on Tuesday, while Goldman Sachs said oil production from Iraq’s Kurdistan region was likely to be jeopardized by the standoff with Iraq.
Despite the fears of the Kurdistan region referendum affecting oil output, the banking company said the conflict between the United States and Iran remains a bigger long-term threat to global supplies.
Brent crude futures LCOc1 gained 6 cents, or 0.1 percent, to settle at $57.88 per barrel, while US crude CLc1 gained 1 cent to settle at $51.88. Both contracts traded up nearly 1 percent and down over 1 percent during the day.
“In the case of Iran, there are likely no immediate impacts on oil flows and there remains high uncertainty on potential reintroduction of US secondary sanctions. If they are, we expect that several hundred thousand barrels of Iranian exports would be immediately at risk,” analysts at Goldman Sachs said in a research note published Tuesday.
“In the case of Kurdistan, the 500,000 barrel-per-day (bpd) Kirkuk oil field cluster is at risk with initial reports that 350,000 bpd has shut in, although this remains unclear,” Goldman analysts said.
On the other hand, Iraqi Oil Minister Jabar al-Luaibi announced plans to construct a new refinery in the oil-producing region of Kirkuk, which has become the scene of open conflict between Baghdad and the Kurdistan Regional Government.
The Iraqi government also plans to increase oil production from the region to more than a million barrels per day, with a foreign oil company to be contracted to implement the plan, according to the minister.
More so, Russia’s TASS news agency had cited Russian Energy Minister Alexander Novak on Tuesday as saying that Russian oil companies may continue working in Iraq despite continued tension there.
Iraq is second-largest oil producer at the Organization of the Petroleum Exporting Countries.
After a strong rally in the previous session, geopolitical tensions edged oil prices higher on Tuesday morning. Brent crude rose 0.6 percent to $58.16 a barrel while US oil futures hovered near the $52 level in lunchtime trade.