Oil supplies from Iraq, the Middle East’s second-biggest producer, are “potentially vulnerable” amid rising political risks in the country and the broader region, the International Energy Agency warned, according to Bloomberg.
Crude prices briefly soared to a three-month high above $70 a barrel last week as tensions between the U.S. and Iran erupted in neighboring Iraq, where America assassinated an Iranian general and Tehran struck U.S. military bases in response. Though hostilities faded, the threat of escalation still menaces Iraq, which was already grappling with domestic protests that spread to its oil-rich southern region.
Iraq’s oil exports have doubled during the last decade to reach 4 million barrels a day, with half these volumes flowing to China and India, the two major centers of global demand growth, the Paris-based IEA said in its latest monthly report. The country relies heavily on shipping crude through the Strait of Hormuz, which Iran has periodically threatened to close.
Even if OPEC and its allies fully implement the deeper cutbacks announced last month, world markets will still face a surplus of about 800,000 barrels a day in the first half of the year, the IEA predicted.
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