Sept. 27 (UPI) — Turkey’s threat to close a Kurdish oil pipeline, potentially disrupting production of one half million barrels per day, sent global crude prices upward on Wednesday.
Turkish President Recep Tayyip Erdogan made the threat after residents of northern Iraq’s Kurdistan voted overwhelmingly for independence in a non-binding referendum. He proposed to close Kurdistan’s main pipeline leading to the Turkish port of Ceyhan.
The possible cut to global production, at a time of strong demand and of supply cuts by OPEC nations, helped send global crude oil prices toward a milestone of $60 per barrel. It has not traded at that level since July 2015, market analyst Ole Hanson of Saxo Bank said Wednesday.
The longer-term outlook could mean higher prices for oil, Hanson and others said.
An expected surge of demand will likely eliminate the current global excess of supply, said Phil Flynn of The Energy Report on Wednesday. He added that economies using cheap oil to create growth will soon pay higher prices to fuel that growth.
The surge in demand was noted in the American Petroleum Institute report and in a July drop in Texas oil production. The API, despite prediction of an increase in crude supply, reported a draw of 761,000 barrels. U.S. demand for oil last week was 4.26 million barrels per day, the highest level in 20 years. High demand from refineries in the United States and Europe indicates that crude oil prices will remain strong.
Early in the trading day, Brent futures for delivery in November stood at $57.93 per barrel on Wednesday, down 0.51 percent. West Texas Intermediate, the U.S. benchmark for the price of oil, was at $51.87 per barrel, down 0.01 percent.