The price of oil rose on Monday, with Brent approaching a nine-month high at $114/bbl, after Islamic militants captured more territory in Iraq. Solid manufacturing data from China also sparked concernes global oil demand could soon jump.
Over the weekend Islamic insurgents seized four new towns and two border crossings of Iraq's frontiers with Jordan and Syria. The blitz has greatly expanded the territory under their control in the North.
Brent oil reached its highest level since September 9th last year to $114.02 a barrel in Nasdaq Stock Exchange. At the same time crude futures for August delivery rose to $107.17 per barrel on the New York Mercantile Exchange.
Jorge Montepeque, Global Director of Market Reporting at Platts in an interview with RT called the current trend in the oil market as a “precaution.”
“I think people have done the precautionary buying. And if they see some production shading, then prices could go up even further. But the situation is changing so quickly in Iraq right now,” Jorge Montepeque said.
“Even though the oil is mainly delivered through the south, there could be some disruptions. And the most likely thing is that some production will be lost,” he added.
Earlier on Monday, China posted strong manufacturing datafor June indicating that the slowdown in the country's economy is bottoming out. The HSBC preliminary manufacturing purchasing managers index PMI came in at a seven-month high of 50.8 compared with 49.4 in May.
It is the first time this year the index has moved above the 50 mark, showing expansion and leading to increased energy demand.