LONDON — Oil slipped below $114 a barrel on Tuesday, retreating further from a nine-month high, as concerns eased that escalating violence in Iraq would affect supplies from the Organisation of the Petroleum Exporting Countries’ (Opec) second-largest oil producer.
According to tanker loading data and Reuters sources, exports from southern Iraq — the outlet at present for almost all of Iraq’s crude exports — have held at near-record rates in the first three weeks of June.
Exports from the southern terminals averaged 2.53-million barrels per day (bpd) up to June 21, even as militants from the Islamic State of Iraq and the Levant (ISIL), also known as ISIS, captured swathes of territory in northwest and central Iraq.
"Fears that the advance of the Sunni terrorist group ISIS in Iraq could result in disruptions to the Iraqi oil supply appear to be abating somewhat," said Commerzbank analyst Carsten Fritsch.
"The ongoing uncertainty means that no sharp price slide is likely, however. In the next few weeks, we expect to see Brent trading at above $110."
Brent crude dropped 39c to $113.73 by 8.53am GMT, down from a nine-month high of $115.71 last Thursday. The benchmark had its largest one-day drop since May 16 on Monday.
US crude fell 54c to $105.63.
US intervention in the Iraq crisis, with air strikes or other military action, could lead to higher oil prices, but such steps appear less likely for now.
US Secretary of State John Kerry on Monday promised "intense and sustained" US support for Iraq, but said the country would only survive if its leaders took urgent steps to bring it together.
The Iraq crisis, nonetheless, poses a threat to oil supplies at a time when outages in Libya, Syria and Iran have already curbed global production by almost 3-million bpd, or more than 3% of daily global demand.
Libya’s Hariga oil port was shut on Monday for crude exports after reopening at the weekend, after guards demanding salaries prevented a tanker from loading.
Aside from geopolitical supply risks, investors will focus this week on the latest surveys of US oil supplies. A Reuters survey forecast US crude inventories fell 1.3-million barrels on average last week, while product stockpiles rose.
