Oil steady as United States output gains offset Middle East tensions

Iraqi Oil Worker Works In Refinery

Crude prices have increased significantly this month just as demand seems sturdier compared to any point in previous months, especially in China.

Wall Street closed at record highs, the dollar edged up and copper touched a three-year peak on Monday as upbeat Chinese data drove optimism about the world's second-biggest economy, while oil prices jumped due to supply worries after Iraqi forces seized the oil-rich city of Kirkuk from Kurdish fighters. U.S. light, sweet crude was 25 cents higher at $52.12. This is months after of range-bound trading during which OPEC-led supply cuts buoyed crude prices but rising USA output capped markets.

The subsidiary of SK Innovation Co., South Korea's top oil refiner, said the shipments will be composed of 7.5 million barrels of American crude oil and 1.5 million barrels of Mexican crude oil.

Brent crude, a European reference point, is selling for more than $58 a barrel for December delivery. The fighting in one of Iraq's main oil-producing areas helped to restore a risk premium on oil prices, though officials said that oil fields in the region were operating normally.

The Organization of the Petroleum Exporting Countries, OPEC, made their decision to extend cuts in oil output by nine months by March 2018, delegates said.

In addition, the conflict in Iraq has shocked markets as it adds to growing strains between the United States and Iran.

On Friday, U.S. President Donald Trump said he was officially withdrawing his certification of Iranian compliance with the nuclear deal, in what is being billed as part of a tougher strategy on Iran.

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The other geopolitical risk helping crude prices is the possibility the US will impose fresh sanctions on Iran, limiting its oil export capacity.

"Oil and geopolitics are very much interlinked", Fatih Birol, executive director of the International Energy Agency, told Reuters.

Various analysts are also revising the oil price predictions as the global crude market continues to tighten.

However, without the support of other countries, it appears unlikely that production would fall by 1 million barrels per day to the levels before Western sanctions were imposed on the country, Goldman said.

The cuts are likely to be shared again by non-OPEC members led by top oil producer Russian Federation, which lessened output joining OPEC from January. On October 10, 2017, the Brent-WTI spread was $5.69.

The euro slipped 0.2 percent to $1.1799 and was poised for its third straight day of losses on lingering concerns about the eurozone after a conservative Austrian leader secured a victory in parliamentary elections at the weekend.

USA inventories fell by 7.13 MMbbl last week, the American Petroleum Institute was said to report.

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