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Iraq violence sends crude prices surging towards $115 Gold futures hit 2-1/2-week peak

LONDON, June 14, (AFP): Oil hit a nine-month peak this week as unrest erupted in key OPEC crude producer Iraq, while haven investment gold struck a multi-week high as many investors sought safety. The Iraqi government bolstered Baghdad’s defences on Friday as jihadists pushed towards the capital and US President Barack Obama said he is examining options short of sending ground troops to help Baghdad counter the Sunni extremist offensive. Predominantly Shiite Muslim Iran will combat the “violence and terrorism” of Sunni extremists who have launched an anti-government offensive in neighbouring Iraq, President Hassan Rouhani warned. However, it was not clear what steps Tehran would take to thwart a bid by fighters from the Islamic State of Iraq and the Levant (ISIL), who are pushing toward Baghdad after seizing several cities and towns to the north.


OIL: Brent prices leapt to $114.69, touching the highest level since September 2013, as traders eyed worsening violence in key OPEC crude exporter Iraq.
“Prices are still being driven up by the events in Iraq, where militants from the Sunni terrorist group ISIL have seized further territory and are now said to be just a few kms away from the capital, Baghdad,” said Commerzbank analyst Carsten Fritsch.
“The US is now considering air strikes by way of supporting the Iraqi armed forces in their fight against the ISIL. The Iraqi government increasingly appears to be losing control of the country.”


The International Energy Agency cautioned that oil supplies from Iraq may not be at immediate risk.
Iraq is the second biggest oil exporter in the 12-nation Organization of Petroleum Exporting Countries (OPEC) after kingpin Saudi Arabia.
“Concerning as the latest events in Iraq may be, they might not for now, if the conflict does not spread further, put additional Iraqi oil supplies immediately at risk,” the Paris-based IEA said in its monthly report.
It pointed out that Iraq’s relatively small output from the north of the country has been off the market since March due to violence, while output from the south has been on the rise and production has hit a 30-year high.


The 12-nation OPEC oil cartel, which pumps one third of the world’s crude, decided on Wednesday in Vienna to hold their collective production target at 30 million barrels per day (bpd), where it has stood since late 2011, as they said the oil market was stable.
OPEC nations have expressed their satisfaction with prices above $100 a barrel — where they have been for most of this year — as it brings them in sufficient revenue while appearing not to crimp growth in consuming nations.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in July leapt to $113.29 a barrel from $108.77 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for July soared to $106.64 a barrel compared with $102.73 a week earlier.


PRECIOUS METALS: Gold hit a two-and-a-half week peak at $1,277.65 per ounce, as investors sought a safe-haven investment to shelter from Iraq woes.
“Demand for safe haven assets made a comeback after events in Iraq,” said Capital Spreads analyst Jonathan Sudaria. Gold is traditionally viewed as a safe store of value in times of geopolitical uncertainty and unrest.
On the downside, palladium and platinum sank on news of a breakthrough deal to end strikes in key producer South Africa.
South Africa’s radical AMCU union said Friday it had agreed in principle to a deal to end the country’s longest mining strike, which has crippled the world’s largest platinum producers.
By Friday on the London Bullion Market, the price of gold gained to $1,273 an ounce from $1,247.50 a week earlier.
Silver increased to $19.58 an ounce from $19.03.
On the London Platinum and Palladium Market, platinum dropped to $1,437 an ounce from $1,453.
Palladium fell to $816 an ounce from $840.


BASE METALS: Base or industrial metals mostly fell, hit by Iraq worries as traders sought less risky bets.
Three-month aluminium decreased to $1,841.50 tonne from $1,851.
Three-month lead firmed to $2,080 a tonne from $2,075.
Three-month tin slid to $22,600 a tonne from $23,020.
Three-month nickel sank to $18,087 a tonne from $18,624.
Three-month zinc rose to $2,083 a tonne from $2,075.50.


COCOA: Prices hit three-year pinnacles as traders eyed weather-related supply worries.
On the ICE Futures US exchange, cocoa for September dipped to $3,069 a tonne from $3,097 for the July contract a week earlier.


COFFEE: The coffee market also rebounded as traders fretted over supply shortfalls in key producer Brazil.
On LIFFE, Robusta for September increased to $1,988 a tonne from $1,899 for the July contract a week earlier.


SUGAR: The market enjoyed mixed fortunes.
On ICE Futures US, the price of unrefined sugar for October rose to 17.60 US cents a pound from 16.90 US cents for the July contract a week earlier.


RUBBER: Prices in Kuala Lumpur experienced a modest rebound amid encouraging economic data in main consumer China.
The Malaysian Rubber Board’s benchmark SMR20 rose to 168.55 US cents a kilo from 166.60 cents a week earlier.
 

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