Brent oil prices hovered near 26-month highs, supported by Turkey's threat to cut crude exports from Iraq's Kurdistan region as well as signs that market rebalancing is accelerating. David Pollard reports.
This oil worker's turning on the taps but the concern is that they could be turned off. As Turkey threatens to choke crude exports from Iraq's Kurdistan region. (SOUNDBITE) (Turkish) TURKISH PRESIDENT, TAYYIP ERDOGAN, SAYING: "We have the taps. The moment we close the taps, then it's done." It's not been done yet - but along with that warning, Erdogan hinted at possible military intervention. Turkey's anger at a Kurdish independence referendum reaching a new high. And pushing oil prices to new highs too. (SOUNDBITE) (English) CMC MARKETS ANALYST, MICHAEL HEWSON, SAYING: "We've had the president of Turkey ratcheting up the tension. He said that he would potentially invade Iraq, he's talked about potentially cutting off the oil, and I think that has introduced an element of the risk premium into the Brent contract." At nearly 60 dollars a barrel before easing back, Brent futures at levels not seen in over two years. For traders, a bonus effect after OPEC's assessment last week. The oil market, it said, well on the way to 'rebalancing' from an era of ultra-low prices ... Thanks to its 1.8 million barrel per day supply cut pact. Though the lower prices for US-produced WTI could tell a less upbeat story ... Of higher output in the US, thanks to shale. (SOUNDBITE) (English) CMC MARKETS ANALYST, MICHAEL HEWSON, SAYING: "If you look at crude oil inventories over the course of the past few weeks, there's been four successive weeks of build. you can talk about rebalancing, it's probably happening but I don't think it's happening as fast as probably markets think that it is. And that is probably been borne out by the fact that the spread between Brent and WTI is at its widest level since mid 2015." For its part, exports from Iraq's Kurdistan region account for over half a million barrels a day. Those now hanging in the balance - along with a referendum whose results will be announced later this week.