Unfazed Oil Markets: Iraqi Troop Movements at Kuwait Border Have Little Impact

Strategic Insights -

As the US sent troops and planes to the area in response to Iraqi troop movements at the Kuwait border, international oil prices remained relatively unaffected. West Texas Intermediate crude oil futures for November delivery closed down $0.29 to $17.70/bbl on the New York Mercantile Exchange, while the November Brent contract on the International Petroleum Exchange closed down $0.20 to $16.44/bbl. Despite the crisis, traders seem to think the confrontation will not come to armed conflict and will not disrupt the flow of oil from the Persian Gulf.

Key Takeaways:

  • The Iraqi troop movements at the Kuwait border did not significantly impact international oil prices, with West Texas Intermediate crude oil futures closing down $0.29 to $17.70/bbl on the New York Mercantile Exchange.
  • The November Brent contract on the International Petroleum Exchange closed down $0.20 to $16.44/bbl, with December and January futures also dropping.
  • Traders seemed to think the confrontation will not come to armed conflict and will not disrupt the flow of oil from the Persian Gulf.
  • The Iraqi move is expected to keep Iraqi oil off the world market longer, ultimately boosting prices.
  • Senior U.N. diplomats told The Oil Daily that the confrontation has set back indefinitely the day when Iraqi oil exports will return to world markets.
  • The permanent Security Council members are unlikely to persuade the United States and other wary members to support an easing of the sanctions.
  • News of the Iraqi troop movements initially spooked markets, but prices tapered off when it became apparent that Saddam was merely rattling his saber.

Statistics:

  • West Texas Intermediate crude oil futures for November delivery closed down $0.29 to $17.70/bbl on the New York Mercantile Exchange.
  • The November Brent contract on the International Petroleum Exchange closed down $0.20 to $16.44/bbl.
  • December's contract dropped $0.31 to $17.79/bbl, while the January contract fell $0.28 to $17.86/bbl.
  • The December Brent contract on the IPE dropped $0.22/bbl to close at $16.49, and January futures fell $0.28 to close at $16.54/bbl.
  • Unleaded gasoline for November gained $0.49 to close at $47.54 per gallon, but the December contract lost $0.30 to close at $55.35/gallon, and January dropped $0.26 to close at $54.59/gallon.

Sources:

  • The Oil Daily
  • Reuters
  • New York Mercantile Exchange
  • International Petroleum Exchange
  • United Nations Security Council
  • US Department of State