The price of oil eased slightly Tuesday after the U.S. said it was deploying a small group of troops to Iraq, which helped soothe fears somewhat over the prospect of disruption to crude supplies.
By mid-afternoon in Europe, benchmark U.S crude for July delivery was down 18 cents to $106.72 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark used to price international oils, was up 12 cents to $113.06 a barrel on the ICE Futures exchange in London.
Up to 275 U.S. soldiers are being positioned in and around Iraq to protect the U.S. Embassy and other American interests as President Barack Obama weighs options for dealing with the al-Qaeda inspired militants who have captured a vast swath of the country’s north.
Iraq’s crude oil exports have so far not been disrupted but the conflict raises concern about whether the country can rebuild its oil infrastructure and meet global demand.
The International Energy Agency, which acts as a consultancy to developed economies, said its members’ oil reserves were at a “comfortable level” and that the agency was ready to respond quickly to any supply disruptions caused by the turmoil in Iraq.
“At this moment, not a single barrel of oil has been displaced compared to a week ago,” IEA Executive Director Maria van der Hoeven said after the release of the agency’s medium-term oil market report. “But of course you can see that the market is worried.”
The agency noted it had cut its expectations of Iraq’s oil output over the next five years to 4.5 million barrels a day by 2019, nearly half a million barrels a day less than forecast a year ago. That forecast was made before the recent violence in Iraq, so it could be lower, the IEA said.
In its report, the IEA also said that a persistent, significant loss of crude from Iraq would make it difficult for oil prices to return to earlier, lower levels of $90 per barrel.
In other energy futures trading:
- Wholesale gasoline added 0.85 cent to $3.049 a gallon.
- Natural gas lost 0.2 cent to $4.705 per 1,000 cubic feet.
- Heating oil rose 0.58 cent to $3.0037 a gallon.