Oil Prices Decline Amid Confusion Over Iraq Pipeline Attack

Strategic Insights -

Oil prices fell in New York and London as traders questioned the extent of damage to an Iraqi pipeline after a U.S. attack. The U.S. had assured that the targets were military communications facilities, and not the pipeline. Turkish officials confirmed that oil had stopped flowing, but Iraq said it would take four weeks to repair the affected section. Venezuelan officials announced plans to meet their OPEC quota, but the market remained largely unchanged.

Key Takeaways:

  • Crude oil futures prices lost 3 cents in New York, closing at $12.24/bbl.
  • Prices initially rose on reports of the U.S. attack, but never rose above $12.55/bbl due to trader confusion.
  • The U.S. defense secretary and a State Department official stated that the targets were military communications facilities, not the pipeline.
  • Iraqi officials said it would take four weeks to repair the affected section of the pipeline.
  • Turkish officials stated that oil would resume flowing within 48 hours.
  • Venezuela announced plans to meet its 2.845 million b/d OPEC quota by the start of the ministers' meeting on March 23.
  • Valero Energy Corp. is considering restarting an 85,000 b/d crude unit at its Houston refinery in the next 10 days.
  • Natural gas spot prices rose by 3-4 cents in Louisiana and South Texas, while the Nymex Henry Hub April contract jumped 7.3 cents to $1.701/MMBtu.

Statistics:

  • $12.24/bbl: The closing price of April light, sweet crude in New York.
  • 3 cents: The decline in crude oil futures prices.
  • $12.55/bbl: The highest price reached by crude oil futures on Monday.
  • 4 weeks: The estimated time it would take Iraq to repair the affected section of the pipeline.
  • 48 hours: The estimated time for oil to resume flowing through the pipeline according to Turkish officials.
  • 2.845 million b/d: Venezuela's announced OPEC quota.
  • 85,000 b/d: The capacity of the Valero Energy Corp. crude unit being considered for restart.
  • $1.701/MMBtu: The price of the Nymex Henry Hub April natural gas contract.

Sources:

  • The Oil Daily.
  • Reuters.
  • Bloomberg.