Oil prices closed up more than 3% on Monday (March 27) following reports that Iraq had suspended some oil exports from Kurdistan region, located in the north of the country. Investors expected global oil markets to face tight supply conditions as a result of the halt.
Both WTI and Brent crude futures closed at two-week highs after Turkey stopped pumping crude oil from the region through its pipeline. An arbitration court affirmed that oil exports required approval from the Iraqi government. The oil exports through the pipeline account for about 0.5% of world oil supply, which is approximately 450,000 barrels per day.
WTI crude futures rose $3.55, or 5.1%, to settle at $72.81 a barrel, while Brent crude futures rose $3.13, or 4.2%, to close at $78.12 a barrel.
Investors were also concerned about the US banking crisis, but the news of the Silicon Valley Bank acquisition eased their concerns. The deal covers all deposits and loans of SVB. Geopolitical conflicts also contributed to the rise in oil prices. The announcement by Russian President Vladimir Putin that a tactical nuclear weapons base would be deployed in Belarus worried countries worldwide, including the United States and members of the North Atlantic Treaty Organization (NATO).
Investors are awaiting the weekly US crude stock report, which the US Energy Information Administration (EIA) will release tomorrow.
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Tuesday, March 28, 2023