Crude rises on Iraq unrest concerns, demand growth prospects

Front-month ICE Brent gains by $3.46/bbl on the day, to $104.33/bbl at 09.00 GMT.

PHOTO: Gas shortages in Europe expected to boost demand. Getty Images

Upward pressure:

Violence in Baghdad has raised concerns over disruption in oil supply from Iraq. The OPEC member nation produces 4 million b/d. Growing support for Saudi Arabia’s proposal to cut oil production is also expected to support prices. The proposal will be discussed by OPEC and its allies at OPEC+ meeting on 5 September.

Demand for crude oil is seen growing amid gas shortages in Europe. Oil majors Shell and TotalEnergies have expressed concerns about Russian gas supply to Europe at a recently held press conference.

Shell CEO Ben van Beurden said, “European gas shortages likely to last several winters”, while TotalEnergies’s top boss Patrick Pouyanne said, “Europe’s governments and policymakers would have to plan for a future without Russian gas.”

Downward pressure:

The International Energy Agency (IEA) chief has told Reuters that Russia's oil output has exceeded expectations in the wake of the war in Ukraine. But added, “Moscow will find it increasingly difficult to uphold production as Western sanctions begin to bite.”

Market participants are waiting for an outcome from negotiations on the Iran nuclear deal. US has shared its views on the EU’s proposal.

Meanwhile, Iranian parliamentarian Fadahossein Maleki said, "the US has given a response that will make a new round of talks inevitable,” as reported by Iranian media.

By Konica Bhatt

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